Bombay High Court
Rajesh Deorao Meshram, Proprietor Of ... vs Murlidhar S/O Namdeorao Khangar on 11 December, 2007
Equivalent citations: 2008(2)BOMCR141, 2008(110)BOM.L.R.93, 2008(1)MHLJ798
Author: R.C. Chavan
Bench: K.J. Rohee, R.C. Chavan
JUDGMENT R.C. Chavan, J.
Page 0096
1. By an order dated 30th June, 2006 this first appeal was directed to be decided at the stage of admission itself and was consequently taken up for final hearing after calling record and proceedings from the trial Court.
2. The appellant herein filed Special Civil Suit No. 850 of 2003 for specific performance of agreement of sale of 6 hectare and 26 Are of land bearing Survey No. 114 and 0.95 H bearing Survey No. 115 at village Wagdhara, Tahsil : Hingna, District : Nagpur. The property was agreed to be sold by the respondent/ owner to the appellant for a consideration of Rs. 19,60,000/-. An agreement of sale was executed on 29th April, 2000 at which time a sum of Rs. 3,15,000/- was paid by cheques and the balance consideration was agreed to be paid in 36 equal monthly installment of Rs. 63,000/- each. Sale deed was agreed to be executed on or before 29th April, 2003. According to the appellant/ plaintiff time was not of essence. The plaintiff gave a schedule of payments made in plaint paragraph 7 which showed that by 30th June, 2002 a sum of Rs. 10,71,000/- had been paid towards the installments for purchase of the property in question. The plaintiff had been placed in possession of the property at the time of execution of agreement of sale. On 23.03.2001 the defendant executed a sale deed of two acres of land out of Survey No. 114/1 for a sum of Rs. 1,80,000/ This was out of land agreed to be sold by the agreement dated 29.04.2000. This amount was to be deducted from the remaining consideration to be paid. There is no dispute between the parties about these facts.
3. According to the appellant/ plaintiff he repeatedly requested the defendant to complete the formalities and statutory requirements in order to execute sale deed. The defendant told the plaintiff to purchase a stamp paper for getting documents prepared and accordingly the plaintiff claims to have deposited a sum of Rs. 14,500/ towards stamp duty for sale deed of 1.45 hectares of land out of Survey No. 114/1. He also issued a notice since the defendant failed to execute the sale deed. Reply by the respondent/ defendant indicated termination of the agreement on his part. The plaintiff claimed that he had spent a huge amount in development of the land and had created third party interest in favour of about 300 persons to whom plot had been allotted with the consent and knowledge of the defendant. The plaintiff, therefore, sought decree for specific performance of agreement of sale dated 29.04.2000 by defendant upon defendant's receiving a sum of Rs. 8,54,000/- towards balance consideration from him.
4. The defendant raised several defences in his written statement, including defendant having no right to sell the property, failure of the plaintiff to pay installments, as scheduled, bouncing of plaintiff's cheque issued towards Page 0097 installments, plaintiff not having necessary funds to get the sale deed executed, and waiver by the plaintiff of right to purchase remaining land by taking sale deed of only two acres. The defendant also contended that since the plaintiff was not an agriculturist he could not purchase the land in question. It was alleged that the plaintiff was not ready and willing to perform his part of the contract and had withdrawn from the contract and, therefore, was not entitled to specific performance of the contract. The defendant went on to allege that the agreement was collateral security for money lending transaction. He denied that he had consented to creation of any third party interest.
5. On these pleadings, the learned trial Judge framed necessary issues and upon considering the evidence tendered before him, dismissed the suit for specific performance. He, however, ordered the defendant to refund a sum of Rs. 10,71,000/- received by the defendant towards part of the consideration along with interest @ 9% per annum from the date of suit till realisation. Aggrieved thereby, the plaintiff has preferred this appeal.
6. The respondent/ defendant has, by his application vide Stamp No. 11152/2006 under Order 41 Rule 33 of the Code of Civil Procedure, sought modification of the decree directing him to repay a sum of Rs. 10,71,000/-. According to the defendant, since a sum of Rs. 1,80,000/- stood adjusted towards transfer of two acres of land by him in favour of the plaintiff on 23rd March, 2001 this amount was required to be deducted from Rs. 10,71,000/-, received by him from the plaintiff, and therefore, he was liable to repay only Rs. 8,91,000/- to the appellant/ plaintiff.
7. We have heard learned Advocate Shri R.V. Gaikwad for the appellant and learned Advocate Shri S.R. Deshpande for the respondent at adequate length.
8. According to the learned Advocate for the appellant, the appellant had paid a major part of consideration of Rs. 10,71,000/ to the respondent vendor. The vendor had accepted cash amount in lieu of cheques which bounced. Even after registered sale deed in respect of two acres of land was executed on 23rd March, 2001 the respondent / defendant had received cash in lieu of cheques on 28.07.2001, 16.12.2001, 13.03.2002, 30.04.2002 and 30.06.2002 clearly indicating that execution of the sale deed on 23.03.2001 did not signal the end of the agreement dated 29.04.2000. He submitted that there was no breach of contract on the part of the appellant and since time was not of the essence there was no reason whatsoever for the respondent to put an end to the contract or for the Court to refuse specific performance. He submitted that various pleas raised by the respondent, including the plea that the transaction was one of loan, indicated that the respondent wanted to somehow avoid sale in favour of the appellant after the appellant had taken several steps for development of the property and had entered into transactions with the third parties with the consent of the respondent. He submitted that agreement dated 29th April, 2000 itself stipulated that the appellant was entitled to transact with the prospective purchasers and receive earnest amount after demarcating plots. In view of this, according to the learned Advocate, reliance placed by the learned trial Judge on judgment of the Page 0098 Supreme Court in Jawahar Lal Wadhwa v. Haripada Chakroberty reported at was unhelpful for refusing specific performance. He submitted that observations in the said judgment were not at all attracted to the fact situation as unfolded in this case.
9. On the other hand, learned Advocate Shri Deshpande for the respondent submitted that even on admitted fact, or facts, as pleaded by the appellant/ plaintiff, the observations of the Supreme Court in Jawahar Lal's case were squarely attracted and therefore, there was no question of grant of specific performance to the appellant. He submitted that the acts on the part of the appellant amounted to repudiation of contract and failure to perform his own obligations indicating unwillingness to perform his part of the contract. Therefore, the respondent could not be directed to perform his part of the contract reiterated with by sale deed dated 23.03.2001 agreement had been exhausted since this sale deed would have to be interpreted as an intention of the appellant to give up his claim to sale of remaining property.
10. Before we proceed to examine the rival contentions it may be useful to recount the facts established from pleadings and evidence in the case. The agreement of sale shows that the respondent had agreed to sell to the appellant 13 acres of land out of Survey Nos. 114 and 115 at village Wagdhara, Tahsil : Hingna, District : Nagpur @ Rs. 1,75,000/ per acre i.e. Rs. 19,60,000/-. A sum of Rs. 3,15,000/- was paid towards earnest in form of five cheques of Rs. 63,000/- each, drawn on Dr. Babasaheb Ambedkar Urban Co-operative Bank. It was agreed that after these cheques were realised the balance was to be received in 36 monthly installments of Rs. 63,000/- each to be paid by cheques, commencing from 29.04.2000. The appellant had accordingly given a cheque book containing 25 cheques towards these amounts. The agreement further stipulated that the respondent was to execute sale deed whenever the appellant so desired in favour of any person or institution indicated by the appellant. The agreement stipulated that if the appellant failed to get the sale deed executed within a time stipulated the earnest amount shall be forfeited and the contract would be cancelled. If the respondent failed to execute the sale deed the appellant was entitled to have it executed through the Court. The agreement provided that the appellant was having the authority to lay plots in the field and to enter into transactions with the customers, receive earnest amount etc. Two plots out of the layout were to be purchased by the vendor at the price at which the field was sold.
11. The plaint itself gives details of amounts paid in pursuance of this agreement aggregating to Rs. 10,71,000/-. There is no dispute about receipt of this amount, as may be seen from the written statement, as also application under Order 41 Rule 33, made by the respondent herein, whereby he agreed that he received Rs. 10,71,000/ but wanted an adjustment of Rs. 1,80,000/- from the amount which the learned trial Judge has ordered him to repay towards the land which he has already conveyed to the Page 0099 appellant. The statement in plaint paragraph 7 shows that many of the cheques were returned to the appellant and the respondent had received cash in lieu thereof. It shows that from 27.05.2000 for a period of 7 months no payment had been made by the appellant to the respondent. It also shows that the less payment received by the respondent was on 30th June, 2002.
12. As already recounted there is no dispute about the fact that, in the meantime, on 23.03.2001 a sale deed of two acres of the land was executed in favour of the appellant. The judgment of the trial Court also recounts that in pursuance of the order passed by the trial Court below Exh.5 the appellant has deposited Rs. 10 Lacs in the Court towards the balance of consideration on 26.03.2004.
13. Parties had exchanged notices wherein the appellant asserted that he was always ready and willing to purchase the land by paying balance, whereas, the respondent asserted in his notice dated 29.08.2003 amongst other things that he was not ready to accept belatedly the terms and conditions of the agreement of sale which had already been cancelled, in view of escalation of price.
14. In light of these facts, it would have to be found out whether the learned trial Judge was justified in refusing specific performance of the agreement to the appellant/ plaintiff. The learned trial Judge has relied on the judgment in Jawahar Lal v. Haripada (referred above) According to the learned Advocate for the respondent, in view of this judgment the appellant is not at all entitled to a decree. In that case, the Court was considering an award by a former Judge of the Supreme Court in pursuance of the orders of the Court dated 18th November, 1987. The respondent therein had by taking loan from the State started construction of a building on the plot allotted to him. Since the amount of loan was not adequate he claimed to have borrowed a sum of Rs. 5,000/- from appellant No. 1 and had executed a document indicating that it was an advance paid towards the sale price. Respondent had also executed power of attorney in favour of appellant No. 1 enabling appellant No. 1 to carry on construction work on behalf of the respondent. Later, by another agreement for construction executed between the parties the respondent was to pay a sum of Rs. 80,000/- to appellant No. 1 towards the price of construction, Rs. 20,000/- as profit and labour charges and also to deposit an amount of Rs. 15,000/- by way of security to appellant No. 1. After completion of construction on payment of the sum of Rs. 1,15,000/- within three years in lump sum appellant No. 1 was to handover possession of the building and plot to the respondent. On 16.01.1976 by notice through his advocate the respondent has repudiated the said agreement for sale contending that it has been procured by fraud. This dispute went through hierarchy of the Courts to the Apex Court where a former Judge of the Court was appointed as a sole arbitrator, who gave an award holding that the respondent was entitled to a sum of Rs. 58,498.60p. with interest @ 18 percent per annum from the date of reference to the date of the award and was also Page 0100 entitled to recover possession of the building from the appellant. This award was challenged before the Apex Court.
15. In this background the Court made following observations in paragraph 4 of the judgment:
...In our view, Mr. Bhandare may be right in contending that this decision does show that it has been held by this Court that in certain circumstances once a party to a contract has repudiated a contract, it is not necessary for the other party to tender the amount payable under the contract in the manner provided in the contract in order to successfully claim the specific performance of the contract. The decision, however, nowhere lays down that where one party to a contract repudiates the contract, the other party to the contract who claims specific performance of the contract is absolved from his obligation to show that he was ready and willing to perform the contract. Mr. Bhandare's argument really is to the effect that the respondent wrongly repudiated the contract by his said letter dated 16th January, 1976, before all the mutual obligations under the contract had been carried out, that is to say, he committed an anticipatory breach of the contract and in view of this, Appellant No. 1 was absolved from carrying out his remaining obligations under the contract and could claim specific performance of the same even though he failed to carry out his remaining obligations under the contract and might have failed to show his readiness and willingness to perform the contract. In our view, this argument cannot be accepted. It is settled in law that where a party to a contract commits an anticipatory breach of the contract, the other party to the contract may treat the breach as putting an end to the contract and sue for damages, but in that event he cannot ask for specific performance. The other option open to the other party, namely, the aggrieved party, is that he may choose to keep the contract alive till the time for performance and claim specific performance but, in that event, he cannot claim specific performance of the contract unless he shows his readiness and willingness to perform the contract....
16. We have strenuously endeavoured to comprehend as to how on the facts, which are not in dispute, it can be said that the appellant had committed anticipatory breach of the contract. From the reasons recorded by the trial Judge in paragraph 14 of his judgment and the arguments of the learned advocate for respondent, it seems that according to respondent though the respondent repudiated the contract by notice Exh. 62 dated 29.08.2003 and earlier by reply dated 15.06.2003 this cannot justify non performance by appellant of his contractual obligations presumably thereafter. The record shows that this notice was replied on 06.10.2003 and was followed up by filing the suit on 31.10.2003 within two months of this notice allegedly repudiating contract. Therefore, we do not see what breach was committed by the appellant because of repudiation. The questions whether :
(i) Appellant had committed breach of his obligations under the contract;
Page 0101
(ii) he had proved his everreadiness and willingness to perform his part of the contract; and
(iii) the agreement dated 29.04.2000 stood rescinded/ abrogated by sale deed dated 23.03.2001, are altogether different questions and cannot be resolved by reference to judgment in Jawahar Lal's case.
17. We would, therefore, proceed to examine these questions. There is no doubt that appellant did not stick to the schedule of payment. Many of his cheques had to be returned in exchange of cash payment made months after the due date. The respondent had two courses open. When the very first cheque bounced he could have repudiated the contract by issuing appropriate notice, or could have condoned the lapse. The respondent chose the later course. Even after successive bouncing of cheques, and deviation from schedule of payment, he continued to accept monies from the appellant as late as till 30.06.2002. This indicates, first, that the appellant wanted to comply with his obligations, albeit late, and, secondly, that the respondent had condoned such delays. In view of this, the learned trial Judge must be held to have erred in concluding that appellant had committed breach of his obligations. The learned trial Judge seems to have confused timeliness of performance with non performance or unwillingness to perform.
18. Even as regards the sale deed dated 23.03.2001, the learned trial Judge seems to have overlooked the fact that after this sale deed, the respondent received installments of Rs. 63,000/- each on 28.07.2001, 16.12.2001, 13.03.2002, four instalments of Rs. 63,000/ each on 30.04.2002, and a last instalment on 30.06.2002. Thus, a sizeable sum of Rs. 5,05,000/- was received after 23.03.2001. It would be for the respondent to explain why he went on receiving these amounts, if according to him the contract stood rescinded/ abrogated by sale deed dated 23.03.2001. As for the lull from 30.06.2002 (the last payment) to 15.06.2003 when appellant gave the first notice, the notice states that the appellant approached the respondent personally on 29.04.2003 (the date on which 36 months period came to an end) but respondent avoided. Notice asserts that the appellant was ready to pay the balance at the time of registration of sale deed. This notice was replied by the respondent, copy whereof is at page 94 of the paper book. In paragraph 3 thereof the respondent stated that he was ready and willing and that the appellant committed breach, but assailed the agreement itself by raising all contentions like appellant was not an agriculturist, the agreement was insufficiently stamped, the contract was already terminated and appellant was orally informed (without however specifying when was the contract terminated). Therefore, the learned trial Judge could not have held against the appellant on the question of readiness and willingness to perform his part of the contract. As already recounted, the appellant deposited Rs. 10 Lacs on 26.03.2004 in pursuance of orders on Exh.5 in the trial Court, is barely five months of filing the suit.
Page 0102
19. The learned Advocate for appellant relied on a judgment of the Apex Court in Swarnam Ramchandran (Smt.) and Anr. v. Aravacode Chakungal Jayapalan reported at . The facts of that case would show that, there too, the purchaser had made payments in installments and once even by post dated cheque, and beyond the date fixed under the agreement. The vendor claimed to have made time the essence of contract by a communication. Purchaser sought decree for specific performance, which vendor resisted, contending that time was of essence and therefore vendee was not entitled to decree sought. High Court, on original side, decreed the suit. While dismissing vendor's appeal, the Hon'ble Supreme Court held in paragraphs 12, 16 and 17 as under:
12. That time is presumed not to be of essence of the contract relating to immovable property, but it is of essence in contracts of reconveyance or renewal of lease. The onus to plead and prove that time was the essence of the contract is on the person alleging it, thus giving an opportunity to the other side to adduce rebuttal evidence that time was not of essence. That when the plaintiff pleads that time was not of essence and the defendant does not deny it by evidence, the court is bound to accept the plea of the plaintiff. In cases where notice is given making time of the essence, it is duty of the court to examine the real intention of the party giving such notice by looking at the facts and circumstances of each case. That a vendor has no right to make time of the essence, unless he is ready and willing to proceed to completion and secondly, when the vendor purports to make time of the essence, the purchaser must be guilty of such gross default as to entitle the vendor to rescind the contract.
....
16. Mr. Iyer, learned Counsel for the appellants next contended that the respondent has failed to prove that he was always and that he continued to be ready and willing to fulfil his obligations under the agreement as required by Section 16 of the Specific Relief Act. It was urged that on 30.09.1981, the respondent herein offered two cheques to the appellants for Rs. 30,000 dated 29.9.1981 and a post dated cheque for Rs. 45,000 dated 15.10.1981. That in his evidence, the respondent had conceded that he had no funds on 30.9.1981. That under Section 16, the burden is on the respondent to show that he was always ready and willing to comply with his obligations. Hence, it was urged that the courts below erred in granting specific performance to the respondent.
17. We do not find any merit in the above arguments. The courts below have examined the evidence on record and have recorded a finding of fact that the respondent was in a position to raise the wherewithal for implementing the contract. However, on fact, it is clear that time to complete the sale was extended up to 31.12.1981. That notice terminating the contract was given by the appellants on 3.10.1981 and the respondent had instituted the suit on 2.12.1981 which indicates that the respondent was eager to fulfil his part of the contract.
Page 0103 That it is nobody's case that the post dated cheque had bounced. That there was no unreasonable delay in payment of consideration and, therefore, it cannot be said that the respondent was not ready and willing to perform his part of the contract.
20. In the case at hand, there is nothing to indicate that the respondent ever sought to make time the essence of contract, he simply repudiated the contract by his reply to appellant's notice dated 15.06.2003 mentioning therein that due to escalation of prices, respondent was not ready to abide by the agreement. Question of delay in making payments and not sticking to the payment schedule may have some repercussions of even agreements in respect of sale of immovable property in the present times. When the price of property escalates very fast. However, this does not justify departure from the settled legal norm that time cannot be the essence in agreement to sale of immovable property unless so made by the parties. Therefore, in order to ensure that he did not suffer loss on account of appellant's departure from the payment schedule the respondents should have, first, indicated in the agreement itself that time was to be of essence. Secondly, he could have avoided the complications by refusing to accept delayed payments and, thus, condoning the delay he should have at the first possible opportunity indicated to the appellant that time was to be of essence and also stipulated the consequences of nonpayment, though escalation of price of the property in the mean time would adversely affect the vendor when payment is not made as per schedule. This can be duly taken care of by compensating the vendor for the loss caused while ordering specific performance. Thus, it seems that lure of getting higher price led the respondent to repudiate the contract, though appellant was ready to perform his part. In view of this, it is not necessary to refer to other judgments on which learned Advocate for the appellant placed reliance.
21. The pleas raised by the respondent would show his agreements to avoid the contract by hook or by crook. Having entered into agreement of sale, he went on to contend that he had no right to sell, since it was joint family property. Respondent unabashedly states in the synopsis filed that his sister has filed Regular Civil Suit No. 1122/2006 for partition of suit property. This is in respect of the fact that respondent's son who was examined on behalf of the respondent admitted in cross-examination that five acres out of the suit land Survey No. 114 was sold by the respondent to one Satpute. Thus, the respondent could sell the land to Satpute and also claimed that he lacks capacity to sell the land to the appellant. In any case, it is a risk which the appellant is taking and, therefore, the respondent need not worry on this count.
22. Next, he contended that since the appellant was not an agriculturist he could not have purchased the land (which was avowedly sold for being developed into a non-agricultural layout of plots). Comment on his plea that the transaction was one of loan is unnecessary. The respondent seems to be suggesting a very unusual loan transaction was entered into where the money-lender (appellant) was advancing loan instalments. These attempts of the respondent to avoid fulfilling his obligations under the contract are dishonest. It is unfortunate that the learned trial Judge, instead Page 0104 of seeing through the respondent's tricks, allowed himself to be taken for a ride, by relying on a judgment which was thoroughly inapplicable to the facts unfolded.
23. Therefore, findings of the learned trial Judge in this behalf are thoroughly unsustainable.
24. In view of this, we hold that the learned trial Judge ought to have decreed the specific performance of the contract in favour of the appellant. The appellant has already deposited a sum of Rs. Ten Lacs with the trial Court which can be adjusted towards balance of price (Rs. 19,60,000/- (-) 10,71,000/-(=)8,89,000/-) of Rs. 8,89,000/- due from the appellant. It is not necessary to take into consideration Rs. 1,80,000/- adjusted towards the sale deed of two acres already executed since that land also form a part of the land agreed to be sold under the agreement dated 29.04.2000. The respondent can be entitled to receive balance of consideration plus simple interest @ 9% per annum on the installments which were paid late from the dates when they became due till the payment was made and in respect of the balance till the date of payment of Rs. Ten Lacs in the trial Court. The decree passed by the learned trial Judge is, therefore, set aside and substituted by following:
(i) Suit for specific performance of agreement of sale dated 29.04.2000 is decreed. Respondent/ defendant shall execute sale deed in respect of the remaining part of the suit property upon receiving the balance of consideration plus simple interest @ 9% per annum on the installments which were paid late from the dates when they became due till payment was made.
(ii) Should the amount so calculated be more than the amount of Rs. Ten Lacs in deposit the appellant shall make good the deficit within a week of ascertainment of such an amount by the trial Court. Upon such deposit the respondent shall execute sale deed in respect of the remaining properties excluding that covered by the sale deed dated 23.03.2001, failing which the appellant would be entitled to have such sale deed executed through Court.
(iii) The respondent shall pay to the appellant/ plaintiff costs throughout and shall bear his own.
(iv) The appeal is allowed in the above terms.