Himachal Pradesh High Court
Pradeep Sen And Another vs Desh Raj Verma on 23 December, 2022
Author: Virender Singh
Bench: Virender Singh
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .
RFA No. 110 of 2017
Reserved on: 28.10.2022
Decided on : 23.12.2022
Pradeep Sen and another ...Appellants
Versus
Desh Raj Verma ...Respondent
Coram
The Hon'ble Mr. Justice Virender Singh, Judge.
Yes.
Whether approved for reporting?1 For the appellants : Mr. Lalit Kumar Sehgal, Advocate.
For the respondent : Mr. Surinder Saklani, Advocate.
Virender Singh, Judge.
Appellants have preferred this Regular First Appeal, under Section 96 of the Code of Civil Procedure (hereinafter referred to as 'CPC'), against the judgment and decree, dated 30th December 2016 (hereinafter referred to as 'the impugned judgment and decree'), passed by the learned 1 Whether Reporters of local papers may be allowed to see the judgment? Yes.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 2Additional District Judge-I, Shimla, H.P. (hereinafter referred to as 'the learned trial Court'), in Civil Suit RBT No. 3-S/1 of .
14/12, titled as Desh Raj versus Pradeep Sen & another.
2. By virtue of the impugned judgment and decree, the learned trial Court has decreed the suit of the respondent, for recovery of ₹ 25,00,000/- (Rupees Twenty Five Lakh only), alongwith interest @ 9% per annum, from the date of filing of the suit till the realization of the amount, against the appellants.
3. For the sake of convenience, parties to the lis, are hereinafter referred to, in the same manner, as referred to, by the learned trial Court.
4. Brief facts, leading to the filing of the present appeal, before this Court, may be summed up, as under:
Plaintiff-Desh Raj has filed the suit for recovery of ₹ 25,00,000/- (Rupees Twenty Five Lakh only), as well as, for permanent prohibitory injunction against the defendants, on the ground that defendant No. 2-Karan Vir Singh Pathania had posed himself as General Power of Attorney (hereinafter referred to as 'GPA') of defendant No. 1-Pradeep Sen, and, as such, he had entered into an agreement to sell with the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 3 plaintiff on 10th August, 2011, regarding the land comprised in Khata Khatauni No. 83/79, Khasra Nos. 214, 215, 216, 217, .
218, 219, 220, 221, 222, 223, measuring 01-34-39 hectare (17.17 bighas), situated in Muhal Dhamechi, Patwar Circle Beolia, Shimla Gramin, Tehsil and District Shimla (hereinafter referred to as 'the suit land'), for a consideration of ₹ 6,50,00,000/- (Rupees Six Crore Fifty Lakh only), in favour of the plaintiff.r 4.1 The terms and conditions of the agreement were reduced into writing on 10th August, 2011 and at that time, the plaintiff had paid a sum of ₹ 22,00,000/- (Rupees Twenty Two Lakh only) in cash and ₹ 3,00,000/- (Rupees Three Lakh only) vide cheque No. 195545, dated 10th September, 2011. Thus, the plaintiff had paid a sum of ₹ 25,00,000/- (Rupees Twenty Five Lakh only), as advance money, which was duly acknowledged by defendant No. 2 and the balance sale consideration of ₹ 50,00,000/- (Rupees Fifty Lakh only) was agreed to be paid on or before 16th November, 2011 and further balance amount of ₹ 5,75,00,000/- (Rupees Five Crore Seventy Five Lakh only) was agreed to be paid by the plaintiff, at the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 4 time of execution of the sale deed, which was fixed to be on or before 31st March, 2012.
.
4.2 The plaintiff has further asserted that when the bargain was stuck between the parties, it has been assured by the defendants that the suit land is free from all encumbrances, charges, claim, mortgage, litigation etc. and it has also been agreed that if there will be any defect in the title of the seller, then, they shall make all the losses, suffered by the plaintiff, good.
4.3 It is the further case of the plaintiff that at the time of execution of the agreement to sell, dated 10 th August, 2011, the suit land was shown to be in possession of one Mansha Ram, s/o Sh. Hem Ram, s/o Sh. Karam Dass, in his capacity as Gair Moroos (tenant), in the revenue record, i.e. jamabandi for the year 2007-08 and defendant No. 2 had assured that before the execution of the sale deed, he will get the revenue entry, corrected, with regard to the possession of the suit land. Before this, defendant No. 2 had also assured the plaintiff to supply the authenticated copy of GPA, executed by defendant No. 1.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 54.4 After the execution of the said agreement, the plaintiff had approached defendant No. 2 on 16 th November, .
2011, on the day, when the second installment of ₹ 50,00,000/-
(Rupees Fifty Lakh only) was agreed to be paid by the plaintiff, to defendant No. 1 and requested him to supply the copy of the GPA, executed by defendant No. 1, in his favour, but, defendant No. 2 had failed to supply the said copy, as well as, to get the revenue entry corrected, as per his promise, to do so.
4.5 The agreement, dated 10th August, 2011, is stated to have been executed by the plaintiff in good faith and bonafidely, believing that defendant No. 1 was having the valid GPA to execute the agreement, but, defendant No. 2 had failed to supply/show the copy of the GPA, to the plaintiff, despite his assurances given, to do so.
4.6 It is the case of the plaintiff that defendant No. 2 had falsely pretended to be the GPA of defendant No. 1. It is the further case of the plaintiff that although, defendant No. 2 had received a sum of ₹ 25,00,000/- (Rupees Twenty Five Lakh only), in pursuance to the agreement to sell, but he was not having the valid GPA, at the time of execution of agreement to ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 6 sell, dated 10th August, 2011, and, as such, the said agreement was stated to be not executed between the legally competent .
persons. The said agreement is also stated to be unenforceable, as such, the plaintiff had not paid the second installment to defendant No. 2, on 16th November, 2011.
4.7 The plaintiff has further expressed his apprehension that defendants No. 1 and 2 are now threatening to sell the suit land and also want to change the nature of the same, to the disadvantage of the plaintiff. As such, he has asserted his right to get the amount recovered from defendant No. 2, alongwith interest @ 12%.
4.8 The plaintiff has also set up a case that defendant No. 1, in order to cover up the fraud played by defendant No. 2, on his behalf, has served a legal notice, calling upon the plaintiff, to pay the remaining amount of agreement, dated 10th August, 2011. Defendant No. 1, according to the plaintiff, is not having any such right, as he has not get the revenue record corrected, as per the terms and conditions of the agreement to sell and the name of Mansha Ram, s/o Sh. Hem Ram, s/o Sh. Karam Dass, is still stated to be in the revenue record as Gair Moroos.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 74.9 The cause of action is stated to have been accrued in favour of the plaintiff, firstly, on 10 th August, 2011, when .
the illegal and unexecutable agreement to sell, was entered into between the plaintiff and defendant No. 2, and again, on 16th November, 2011, when the plaintiff had paid a sum of ₹ 25,00,000/- (Rupees Twenty Five Lakh only) to the defendants.
5. On the basis of the above facts, the plaintiff has sought the relief, as claimed in the suit.
6. When put on notice, the defendants have contested/resisted the suit by filing the written statement. In the written statement, the defendants have taken the preliminary objections that the plaintiff has no cause of action to file the present suit; the suit of the plaintiff is not maintainable as he himself has failed to perform his part of agreement, dated 10th August, 2011; the plaintiff has not approached the Court with clean hands and intentionally made the misstatement of facts and has concealed the material facts.
6.1 Elaborating their stand, it is the case of the defendants that the plaintiff has failed to make the payment of ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 8 a sum of ₹ 50,00,000/- (Rupees Fifty Lakh only) by 16th November, 2011, and, thereafter, has also failed to pay a sum .
of ₹ 5,75,00,000/- (Rupees Five Crore Seventy Five Lakh only) by 31st March, 2012, as per the terms and conditions of the agreement to sell.
6.2 The defendants have also expressed their intention that they are ready and willing to perform their part of agreement, dated 10th August, 2011. Time is stated to be the essence of the contract, as such, they have claimed that the amount of ₹ 25,00,000/- (Rupees Twenty Five Lakh only) has been forfeited in favour of the defendants.
6.3 Apart from this, the preliminary objections with regard to estoppel, suit not properly valued for the purpose of court fees and jurisdiction; the Court is having no jurisdiction to try and decide the case; the suit lacks material particulars, the suit is bad for non-joinder of necessary parties and the suit is also stated to be time barred, have also been taken by the defendants.
6.4 On merit, the factum of execution of agreement, dated 10th August, 2011, has been admitted. Elaborating their stand, it is the case of the defendants that defendant No. 2 did ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 9 not pose himself to be the GPA of defendant No. 1, but, he was actually the GPA of defendant No. 1. The original GPA, dated .
20th April, 2008, was shown to the plaintiff and thereafter, agreement, dated 10th August, 2011, was executed.
6.5 The suit has further been contested on the ground that the impugned judgment and decree, passed by the learned Civil Judge, to the effect that defendant No. 1 was the owner-in-possession of the suit land, has duly been shown to the plaintiff. It has also been denied that defendant No. 2 had assured the plaintiff that he will get the revenue entry rectified, before the execution of the sale deed and he is trying to get support from the fact that the above fact has not been mentioned in the agreement to sell.
6.6 Further, it is the stand of the defendants that the plaintiff himself has failed to perform his part of contract. As such, a prayer has been made to dismiss the suit.
7. The plaintiff has filed the replication, denying the preliminary objections as well as the factual position, as contained in the written statement, by re-asserting that of the plaint.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 108. From the pleadings of the parties, the following issues were framed by the learned trial Court, vide order, .
dated 17th June, 2013:
"1. Whether the plaintiff is entitled to recover a sum of ₹ 25,00,000/- (rupees twenty five lacs only) alongwith pendente lite and future interest @ 12% per annum, as prayed for? OPP
2. Whether the plaintiff is entitled for grant of a decree of perpetual prohibitory injunction against the defendants, as prayed for? OPP
3. Whether the plaintiff has no cause of action to file and maintain the present suit against the defendants? OPD
4. Whether in view of preliminary objection No. 2, the suit is not competent and maintainable? OPD
5. Whether the plaintiff has not come to the court with clean hands and is guilty of deliberate, intentional, misstatement and concealment of facts, as alleged? OPD
6. Whether the plaintiff is estopped from filing the suit on account of his acts, deeds, conduct and acquiescence? OPD
7. Whether the suit is not properly valued for the purpose of court fee and jurisdiction? OPD
8. Whether this Court has no jurisdiction to entertain, try and adjudicate the present suit? OPD
9. Whether the suit is bad for mis-joinder of necessary parties? OPD
10. Whether the suit is barred by time? OPD
11. Relief."::: Downloaded on - 29/12/2022 20:31:58 :::CIS 11
9. Thereafter, the parties to the lis were directed to adduce the evidence. Consequently, both the parties to the lis .
adduced their evidence.
10. After closure of the evidence and after hearing the learned counsel appearing for the parties, the learned trial Court has decreed the suit of the plaintiff, vide the impugned judgment and decree, dated 30th December, 2016, as stated above. r
11. Feeling aggrieved, the present appeal has been filed before this Court, on the ground that the learned trial Court has failed to frame the issues, which are arising out of the stand taken by the parties, in the pleadings and the said fact has caused prejudice to the defendants.
12. The findings of the learned trial Court have also been assailed on the ground that no separate findings have been recorded by the learned trial Court on separate issues.
The learned trial Court has misconstrued and misapplied the provisions of CPC, Specific Relief Act, Power of Attorney Act and Indian Evidence Act, resulting in the wrong findings.
13. According to the defendants-appellants, when the learned trial Court came to the conclusion that defendant No. ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 12 2 was duly appointed GPA of defendant No. 1, vide GPA, dated 30th April, 2008, then the only thing, which was required to be .
seen, is, as to who has violated the terms and conditions of the agreement to sell.
14. On the basis of the grounds of appeal, it has been prayed that the impugned judgment and decree may kindly be set aside, by allowing the appeal and the suit of the plaintiff may kindly be dismissed, with costs.
15. As per the stand taken by the parties, in this case, the factum of execution of the document, i.e. agreement to sell, dated 10th August, 2011, has not been disputed. However, it is the specific stand of the defendants that defendant No. 2 has not posed to be the GPA, but, he was factually having the GPA of defendant No. 1.
16. When the parties to the lis were directed to adduce evidence, then plaintiff-Desh Raj Verma appeared in the witness box and in the opening line, he has deposed that defendant No. 2 was GPA holder regarding the suit land. The agreement was executed on 10 th August, 2011 and at the time of execution of the agreement, the plaintiff had paid a sum of ₹ 25,00,000/- (Rupees Twenty Five Lakh only) to Shri Karan ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 13 Vir Singh, who is described as GPA holder of defendant No. 1.
The total bargain was stuck for ₹ 6,50,00,000/- (Rupees Six .
Crore Fifty Lakh only). He has further deposed that at the time of execution of the agreement, the defendants had assured to get the name of Mansha Ram, in the column of possession corrected and that the original GPA will also be handed over to the plaintiff.
16.1 Highly relying upon the jamabandi, Ex. PW-1/A, in which the name of Mansha Ram, has been mentioned in the column of possession, it is the further case of the plaintiff, as deposed by him, that on 16th November, 2011, he had gone to defendant No. 2 to Junga, alongwith the part payment of ₹ 50,00,000/- (Rupees Fifty Lakh only), but, he was not found there nor he got the revenue record corrected, as per his undertaking. Defendant No. 2 has also not supplied the copy of GPA to him. On 5th April, 2012, he received a notice mentioning therein that the time limit, as fixed vide the agreement, has been expire and the amount paid as earnest money has been forfeited. Lastly, he has prayed that his suit for recovery of 25,00,000/- (Rupees Twenty Five Lakh only) be decreed.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 1416.2 In the cross-examination, this witness has deposed that at the time when bargain was stuck, he was all alone.
.
This witness had gone through the revenue record at the time of execution of the agreement to sell. He has voluntarily stated that defendant No. 2 has assured that the case has been decided in their favour and only revenue record is to be corrected.
16.3 He has denied that at the time of execution of the agreement to sell, GPA as well as the coy of the decision of the Court was shown to him. He has admitted that there is no stipulation with regard to the correction of the revenue record in the agreement nor there is any stipulation that original GPA is to be shown to him.
16.4 He has further admitted that as per the agreement, he had agreed to pay a sum of ₹ 50,00,000/-
(Rupees Fifty Lakh only) up to 16 th November, 2011 and remaining amount up to 31 st March, 2012. On 16th November, 2011, this witness had gone to the defendant alongwith the cheque of ₹ 50,00,000/- (Rupees Fifty Lakh only). On that day, defendant No. 2 was not found present there. He has further admitted that when he had failed to make the payment, as per ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 15 the agreement, then a legal notice was served upon him, which has not been replied by him, however, he has filed the present .
suit.
16.5 Prior to 31st March, 2012, this witness has not issued any notice to the defendants regarding the execution of the sale deed. Similarly, he has not issued any notice to peruse the GPA or to get the revenue entries corrected.
16.6 This witness was intended to make payment of the balance sale consideration on 16th November, 2011 by way of cheque pertaining to his bank account of Himachal Gramin Bank, Khalini, however, he could not disclose about the amount, which was in his account, at that time.
16.7 He has further deposed that prior to filing of the present suit, he has not issued any notice to the defendants, to perform their part of contract, as per the agreement, however, voluntarily stated that he has requested the defendants to get the revenue record corrected and show the original GPA. The agreement to sell was executed by this witness after satisfying himself regarding the revenue record, but, again stated that he was assured, on the undertaking of the defendants, to get the revenue record corrected.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 1617. To rebut this evidence defendant No. 2 - Karan Vir Singh Pathania appeared in the witness box as DW-1 and .
filed his affidavit in his examination-in-chief as DW-1/A, which is based upon the stand, as taken by him, in his written statement.
17.1 In the cross-examination, this witness has deposed that at the time of execution of the agreement to sell, he was present alongwith Anirudh Singh and P.C. Sharma. He has denied that he had not signed the agreement, Ex. DW-1/H. Defendant No. 1 had given the GPA to him in the year 2008.
On 21st August, 2002, this witness was not having the GPA of defendant No. 1-Pradeep Sen. He has denied that at the time of execution of the agreement, the title of the suit land was not clear. As per the terms and conditions of the agreement to sell, the sale deed was to be executed up to March, 2012.
Notice was issued to the plaintiff on 5th April, 2012, when he has admitted that there is no reference with regard to the fact that notice was issued through GPA. Pradeep Sen had come to Shimla in the month of November, 2011, to receive the payment. He has admitted that he had received the payment of ₹ 25,00,000/- (Rupees Twenty Five Lakh only) from the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 17 plaintiff, but, no receipt was issued, in this regard. Revenue entries were got corrected in the year 2012. GPA, which was .
issued in his favour, has not yet been revoked. The cheque was deposited in the account of Pradeep Sen and rest of the amount was also given to him, when, he came to India, in the month of November, 2011.
18. Apart from the above oral evidence, the parties to the lis have also adduced the documentary evidence. Ex. PW-
1/A is the copy of jamabandi. Ex. DW-1/A is the copy of GPA;
Ex. RA is the legal notice issued by defendant No. 1 to the plaintiff; Ex. DW-1/B is copy of judgment and decree, dated 21st August, 2002; Ex. DW-1/C is the copy of jamabandi for the year 2003-04; Ex. DW-1/D is aksh tatima; Ex. DW-1/E is the copy of the legal notice; Ex. DW-1/F is the postal receipt; Ex.
DW-1/G is the acknowledgment; and Ex. DW-1/H is the agreement to sell, dated 10th August, 2011.
19. In this case, the controversy revolves around document, Ex. DW-1/H, which is the agreement to sell between the parties. Although, the plaintiff has filed the suit for recovery, but, in the said suit, he has based his claim on this document, which has also been termed as agreement to sell, ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 18 dated 10th August, 2011. The execution of this document has not been disputed by the parties and, as such, there is no legal .
hesitation for this Court to say that it is an admitted document. Once this finding has been given, then, the controversy between the parties has to be decided, on the basis of this document.
20. It is also not in dispute that the agreement to sell, Ex. DW-1/H, has been executed by the parties themselves of their free will and volition.
21. A bare perusal of the agreement to sell, Ex. DW-
1/H, shows that this document was executed between defendant No. 1, through his GPA, defendant No. 2 and the plaintiff-Desh Raj Verma. Although, it has not been disputed, even, in the pleadings of the plaintiff that the agreement to sell has been executed between the parties on the basis of the GPA, as, in para-1 of the plaint, it is the pleaded case of the plaintiff that defendant No. 2, posing himself as General Power of Attorney holder of defendant No. 1, entered into an agreement to sell, with regard to the suit land with the plaintiff on 10th August, 2011. Although, DW-1, while appearing in the witness box has deposed that on 21 st August, ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 19 2002, he was not having the GPA, but, no benefit could be derived by the plaintiff from the said stray of admission on the .
part of defendant No. 2. The agreement to sell was executed on 10th August, 2011.
22. The learned trial Court, in this case, has given much weightage to the fact as to whether the original GPA was shown to the plaintiff, at the time of execution of the agreement to sell or not. Here, in this case, there is no dispute with regard to the execution of the agreement.
23. Two copies of the GPA, executed by defendant No. 1, in favour of defendant No. 2, have been placed on the record.
One is the document, which has been marked as Mark-PX.
This is the photocopy of the GPA. Second page of this document shows that the same is having the endorsement of the Assistant Consular Officer of the Consulate General of India, New York. This endorsement was made on 25th October, 2011, whereas, the copy of the GPA, which has been exhibited as Ex. DW-1/A, was without the endorsement of the Consulate General, however, the said document bears the date as 4th March, 2008. Document, Mark-PX, has been placed on record by the plaintiff. This fact also falsifies the claim of the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 20 plaintiff, in this case, that the copy of the GPA was not given to him, as, pleaded by him in para-5 of the plaint, wherein, he .
has pleaded that defendant No. 2 had failed to supply copy of General Power of Attorney, executed by defendant No. 1, in his favour.
24. In the plaint, the relief of recovery has only been sought, on the ground, that neither the copy of the GPA was supplied to him, nor, the revenue record has been got corrected. In this case, the relationship of the parties is contractual relationship, based upon the agreement, Ex. DW-
1/H. This agreement was executed by defendant No. 2, being the GPA of defendant No. 1, with the plaintiff. The terms and conditions of the agreement were reduced into writing and both the parties, thereafter, put their signatures in the presence of the witnesses. Plaintiff has not bothered to examine any of the attesting witnesses of this document.
25. In such situation, his sole statement, qua the fact that there were other stipulations with regard to the supply of the copy of the GPA and to get the revenue entries corrected, cannot be accepted as gospel truth. Had there been such stipulation agreed upon between the parties, then, there would ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 21 have been no legal hesitation, for the parties, to mention, these conditions, in the agreement to sell, itself.
.
26. Conditions No. 1 to 10 of the agreement to sell, Ex.
DW-1/H, nowhere stipulate that the defendants had ever agreed to supply the copy of the GPA or to get the revenue record corrected, as alleged, by the plaintiff, in this case.
27. Defendant No. 1, in this case, got served registered notice, EX. RA, upon the plaintiff through his counsel, in which, it has clearly been mentioned that, on account of non-
performance of the conditions of the agreement to sell, dated 10th August, 2011, the amount of ₹ 25,00,000/- (Rupees Twenty Five Lakh only) paid by the plaintiff, stands forfeited in favour of defendant No. 1. This notice was issued on 5 th April, 2012, whereas, the last date for execution and registration of the sale deed, as per the agreement to sell, Ex. DW-1/H, was 31 st March, 2012.
28. Again, adverting to the conditions, as mentioned in the agreement to sell, Ex. DW-1/H, the total sale consideration was ₹ 6,50,00,000/- (Rupees Six Crore Fifty Lakh only), out of which ₹ 25,00,000/- (Rupees Twenty five Lakh only) were received by defendant No. 2, being GPA, at ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 22 the time of execution of the agreement to sell, and, as per the conditions, as stipulated in the agreement, payment of the .
remaining amount has been agreed upon, as under:
(i) ₹ 50,00,000/- (Rupees Fifty Lakh only) to be paid, on or before 16th November, 2011; and
(ii) Balance amount of ₹ 5,75,00,000/- (Rupees Five Crore Seventy Five Lakh only), was to be paid, at the time of execution of the sale deed, which was fixed to be on or before 31st March, 2012.
29. It is the case of the plaintiff that in order to perform his part of contract, he had gone to defendant No. 2, on 16th November, 2011, on which date, the second installment was agreed to be paid to defendant No. 2, as per the conditions of the agreement to sell. He has not made any payment on that day, on the pretext that defendant No. 2 could not supply the copy of the GPA and also failed to get the revenue entries corrected, as per his promise to do so.
30. As discussed above, no such condition has been mentioned in the document, governing the relationship of the parties to the lis, as such, no reliance can be placed upon the bald statement of the plaintiff, regarding the above two conditions.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 2331. The plaintiff has not filed the suit for specific performance of the contract. He has simply filed the suit for .
recovery. The suit for recovery has been filed on 22 nd April, 2013, after receiving the legal notice, Ex. RA, which was stated to be issued on 5th April, 2012.
32. In such situation, the important question, which arises for consideration, before this Court, is about the fact as to whether the plaintiff is entitled to the relief of the recovery, as claimed by him, in the plaint.
33. The subject matter of the agreement, Ex. DW-1/H, was the suit land, for which, the bargain was stuck between the parties, for a sum of ₹ 6,50,00,000/- (Rupees Six Crore Fifty Lakh only) and ₹ 25,00,000/- (Rupees Twenty Five Lakh only) were paid by the plaintiff to defendant No. 1, through his GPA, defendant No. 2, at the time of execution of the agreement to sell.
34. The other conditions regarding the payment of the remaining amount of the sale consideration has clearly been stipulated. The first payment was agreed to be paid on or before 16th November, 2011 and the balance amount of ₹ 5,75,00,000/- (Rupees Five Crore Seventy Five Lakh only) ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 24 was agreed to be paid on or before 31st March, 2012. The same date has been fixed by the parties, mutually, as the last date of .
execution of the sale deed between the parties, regarding the suit land.
35. The defendants, after the stipulated date, i.e. 31 st March, 2012, had cancelled the agreement by issuing the notice to the plaintiff. The plaintiff has not sought the declaration, in the present case, that the agreement to sell is still subsisting between the parties, by pleading that the time was not the essence of the contract.
36. The suit property is situated in the vicinity of Shimla town. In view of the spate of urbanization, this Court has to determine the fact as to whether the time was the essence of the contract or not.
37. The Hon'ble Supreme Court in a case titled as Saradamani Kandappan versus S. Rajalakshmi and others, reported in (2011) 12 Supreme Court Cases 18, has elaborately discussed the conditions, in which, the time can be said to be the essence of the contract. The relevant paras 25 to 43 of the said judgment are reproduced, as under:
"25. The legal position is clear from the decision of a Constitution Bench of this Court in Chand Rani v.::: Downloaded on - 29/12/2022 20:31:58 :::CIS 25
Kamal Rani, (1993) 1 SCC 519, wherein this Court outlined the principle thus: (SCC p. 525, para 19) "19. It is a well-accepted principle that in the .
case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language."
26. Relying upon the earlier decisions of this Court in Gomathinayagam Pillai v. Pallaniswami Nadar, AIR 1967 SC 868, and Govind Prasad Chaturvedi v. Hari Dutt Shastri4 [1977 (2) SCC 539], this Court further held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. Thereafter this court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time : (i) from the express terms of the contract; (ii) from the nature of the property and (iii) from the surrounding circumstances as for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land.
::: Downloaded on - 29/12/2022 20:31:58 :::CIS 2627. In Chand Rani v. Kamal Rani, (1993) 1 SCC 519, Clause 1 of the agreement of sale required the balance consideration to be paid as under:
.
"Rs. 98,000/- will be paid by the second party to the first party within a period of ten days only and the balance Rs.50,000 at the time of registration of the sale deed....".
This Court held that time regarding payment of Rs. 98,000 was the essence, on the following reasoning:
(Chand Rani case, SCC p. 530, para 29) "29. The analysis of evidence would also point out that the plaintiff was not willing to pay this amount unless vacant delivery of possession of one room on the ground floor was given. In cross-
examination it was deposed that since income- tax clearance certificate had not been obtained the sum of Rs. 98,000 was not paid. Unless the property was redeemed the payment would not be made. If this was the attitude it is clear that the plaintiff was insisting upon delivery of possession as a condition precedent for making this payment. The income-tax certificate was necessary only for completion of sale. We are unable to see how these obligations on the part of the defendant could be insisted upon for payment of Rs. 98,000. Therefore, we conclude that though as a general proposition of law time is not the essence of the contract in the case of a sale of immovable property yet the parties intended to make time as the essence under Clause 1 of the suit agreement."
28. The intention to make time stipulated for payment of balance consideration will be considered to be essence of the contract where such intention is evident from the express terms or the circumstances necessitating the sale, set out in the agreement. If for example, the vendor discloses in the agreement of sale, the reason for the sale and the reason for stipulating that time prescribed for payment to be the essence of the contract, that is, say, need to repay a particular loan before a particular date, or to meet an urgent time bound need (say medical or educational expenses of a family member) time stipulated for ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 27 payment will be considered to be the essence. Even if the urgent need for the money within the specified time is not set out, if the words used clearly show an intention of the parties to make time the essence of the .
contract, with reference to payment, time will be held to be the essence of the contract.
self emphasis supplied
29. Let us consider the terms of the agreement of sale in this case to find out whether time was the essence. The standard agreements of sale normally provide for payment of earnest money deposit or an advance at the time of execution of agreement and the balance of consideration payable at the time of execution/registration of the sale deed. In the absence of contract to the contrary, the purchaser is bound to tender the balance consideration only at the time and place of completing the sale [see clause (b) of section 55(5) of Transfer of Property Act, 1882 'TP Act' for short]. In this case we find that there is a conscious effort to delink the terms relating to payment of balance price (clauses 4, 5 and 6) from the term relating to execution of sale deed (clause 7) and making the time essence only in regard to the payment of the balance sale consideration. There is also a clear indication that while time would be the essence of the contract in regard to the terms relating to payment of balance price, time would not be the essence of the contract in regard to the execution of the sale deed.
30. The intention making time essence of the contract for payment of balance price is clear from the following :
(a) clause 4 requires the balance consideration to be paid in three installments that is Rs.1,00,000 on or before 28.2.1981; Rs.1,00,000 on or before 6.4.1981; and Rs.75,000 on or before 30.5.1981;
(b) Clause 5 makes it clear that if any of the abovementioned dates of payment is subsequently declared as a holiday, then the next immediate working day shall be the date of payment. This shows a clear intention that payment should be made on the stipulated dates ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 28 and even a day's delay was not acceptable unless the due date was declared to be a holiday;
(c) Clause 6 specifically stipulates that the .
payments on due dates is the essence of the contract and in case of failure on the part of the purchaser the vendors shall cancel the agreement.
31. On the other hand, if we look at the terms relating to performance of sale, there is a clear indication that time was not intended to be the essence, for completion of the sale. Clause 3 provides that the execution of sale deed shall depend upon the second party (purchaser) getting satisfied regarding the title to the lands, so also the nil encumbrance. It is significant that the said clause does not say that payment of balance consideration shall depend upon the purchaser getting satisfied regarding title or nil encumbrances. Clause 7 provides that the sale deed shall be executed at the convenience of the purchaser, as and when she wants them to be executed either in her name or in the name of her nominee or nominees. Clause 12 provides that if the second party (purchaser) finds the title of the properties to be unsatisfactory or unacceptable, the vendors shall be put on notice about her intention not to conclude the sale and in such an event, if the vendors fail to satisfy the purchaser regarding their title, the vendors shall pay to the purchaser within three months from that date, all monies advanced by the purchaser till then. It is thus evident from clause 12 also that the payments of balance sale price in three instalments on the specified due dates were not dependent upon the further examination of title or the satisfaction of the purchaser about the title.
32. It is clear that the purchaser on the basis of whatever initial examination she had taken of the documents, had unconditionally agreed to pay the amounts in three instalments of Rs.1,00,000 on or before 28.2.1981; Rs.1,00,000 on or before 6.4.1981 and Rs.75,000 on or before 30.5.1981; and if the purchaser was not thereafter satisfied with the title or found the title unacceptable and if the vendors failed to satisfy her about their title when she notified them about her dissatisfaction, the vendors had to refund ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 29 all payments made within three months. Thus it is categorically made clear in the agreement that time regarding payment of balance price was the essence of the contract and such payment was not dependent .
upon the purchaser's satisfaction regarding title.
33. Apart from the above, the plaintiff in her evidence admitted that time for performance was the essence of the contract vide the following questions and answers:
Question : The payment of the due date and in case of failure on the part of the party of second part, the party of the first part shall cancel the agreement. Is this in the agreement or not? Answer : Yes. The dates and the title are important.
Question : Do you know that everywhere in this agreement one thing is made clear that time is the essence of the agreement ?
Answer. Yes. Time is the essence of the contract and also the title must be proved in the agreement.
Her evidence also shows that she apparently did not have the funds to pay the balance of Rs.75,000 due on 6.4.1981 and Rs.75000/- due on 30.5.1981 as was evident from the Bank pass book. It was therefore possible that being not ready to perform the contract in terms of the agreement, the appellant had invented a modification in the terms of the agreement.
34. The learned Single Judge and the Division Bench have recorded a concurrent finding that the time was the essence of the contract and that no change was agreed in respect of the agreement terms as alleged by the appellant. The appellant is unable to place any material which calls for reversal of the said findings. Therefore it has to be held that time regarding payment stipulated in clauses (4), (5) and (6) of the agreement of sale was the essence of the contract and failure of the appellant to adhere to it, justified cancellation of the agreement by the respondents. An aside regarding the principle "time is not of the essence" for future consideration ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 30
23. It is of some interest to note that the distinction between contracts relating to immovable properties and other contracts was not drawn by section 55 of Contract Act (or any other provisions of Contract Act .
or Specific Relief Act, 1963). Courts in India made the said distinction, by following the English law evolved during the nineteenth century. This Court held that time is not of the essence of the contracts relating to immovable properties; and that notwithstanding default in carrying out the contract within the specified period, specific performance will ordinarily be granted, if having regard to the express stipulation of the parties, nature of the property and surrounding circumstances, it is not inequitable to grant such relief. [vide Gomathinayagam Pillai (supra), Govind Prasad Chaturvedi (supra) and Indira Kaur v. Sheo Lal Kapoor, 1988 (2) SCC 188 and Chand Rani (supra) following the decision of Privy Council in Jamshed Khodaram Irani v. Burjorji Dhunjibhai, AIR 1915 PC 83 and other cases]. Of course, the Constitution Bench in Chand Rani made a slight departure from the said view.
36. The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market value of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor-defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 31 bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value .
of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and 'non-readiness'. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for Rs.One lakh and received Rs.Ten Thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining Rs.Ninety Thousand, when the property value has risen to a crore of rupees.
38. It is now well settled that laws, which may be reasonable and valid when made, can, with passage of time and consequential change in circumstances, ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 32 become arbitrary and unreasonable. In Rattan Arya v. State of Tamil Nadu, (1986) 3 SCC 385, this Court held: (SCC pp. 389-90, para 4) .
"4. ...We must also observe here that whatever justification there may have been in 1973 when Section 30(ii) was amended by imposing a ceiling of Rs. 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country, particularly in urban areas. It is common knowledge today that the accommodation which one could have possible got for Rs. 400 per month in 1973 will today cost at least five times more. In these days of universal day to day escalation of rentals any ceiling such as that imposed by Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this court in Motor General Traders v. State of A.P. (1984) 1 SCC 222, a provision which was perfectly valid at the commencement of the Act could be challenged later on the ground of unconstitutionality and struck down on that basis. What was once a perfectly valid legislation, may in course of time, become discriminatory and liable to challenge on the ground of its being violative of Article 14."
(emphasis supplied)
39. In Malpe Vishwanath Acharya v. State of Maharashtra, (1998) 2 SCC 1, a three Judge Bench of this Court considered the validity of determination of standard rent by freezing or pegging down the rent as on 1.9.1940 or as on the date of first letting, under sections 5(10)(B), 7, 9(2)(b) and 12(3) of the Bombay Rents, Hotel and Lodging House Rates Control Ac, 1947. This court held that the said process of determination under the Act, which was reasonable when the law was made, became arbitrary and unreasonable in view of constant escalation of prices due to inflation and corresponding rise in money value with the passage of time. This Court held:
(SCC pp.22-23, paras 29 & 31) ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 33 "29. Insofar as social legislation, like the Rent Control Act is concerned, the law must strike a balance between rival interests and it should try to be just to all. The law ought not to be unjust to .
one and give a disproportionate benefit or protection to another section of the society. When there is shortage of accommodation it is desirable, nay, necessary that some protection should be given to the tenants in order to ensure that they are not exploited. At the same time such a law to be revised periodically so as to ensure that a disproportionately larger benefit than the one which was intended is not given to the tenants......
* * *
31. Taking all the facts and circumstances into consideration, we have no doubt that the existing provisions of the Bombay Rent Act relating to the determination and fixation of the standard rent can no longer be considered to be reasonable."
40. The principle underlying the said decisions with reference to statutes, would on the same logic, apply to decisions of courts also.
41. A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S. Vidyanadam and Others vs. Vairavan, (1997) 3 SCC 1 (by Jeevan Reddy J. who incidentally was a member of the Constitution Bench in Chand Rani). This Court observed: (SCC pp. 7 & 9, paras 10-11) "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. ... 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. ...
11. ... We cannot be oblivious to the reality - and the reality is constant and continuous rise in the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 34 values of urban properties - fuelled by large scale migration of people from rural areas to urban centres and by inflation. Indeed, we are inclined to think that the rigor of the rule evolved by .
courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so."
(emphasis supplied)
42. Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to larger bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and other cases. Be that as it may.
43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam (supra) :
(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was 'ready and willing' to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also 'frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 35 does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the .
consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser."
38. Judging the facts and circumstances of the present case, in the light of the above decision, of the Hon'ble Supreme Court, the parties had mutually fixed the last date for execution of the sale deed as 31st March, 2012 and they have specified the date, on which, the part payment of the sale consideration was to be made. At the time of execution of the agreement to sell, Ex. DW-1/H, only ₹ 25,00,000/- (Rupees Twenty Five Lakh only) was given by the plaintiff to defendant No. 2, being the GPA on defendant No. 1, and two dates have been specified by the parties, regarding the payment of the balance sale consideration.
39. Since the relationship of the parties is governed by the clear and unambiguous terms and conditions of the agreement to sell, as such, condition No. 9, which is reproduced as under, assumes significance:
"9. That in case the second party fails to get the sale deed registered by the stipulated date due to financial lapses, then the first party shall forfeit the advance amount paid to the first party."::: Downloaded on - 29/12/2022 20:31:58 :::CIS 36
40. In pursuance of the said condition No. 9, when the plaintiff failed to perform his part of contract, as per the .
agreement to sell, Ex. DW-1/H, defendant No. 1 has issued the legal notice, by forfeiting the amount, as paid on 10 th August, 2011. The said notice has been given by defendant No. 1, in pursuance of Clause 9 of the agreement to sell. The plaintiff has simply filed the suit for recovery and has not sought the declaration, qua the fact, that the amount paid by him, on 10 th August, 2011, cannot be forfeited by pleading that the time was not the essence of the contract.
41. At the cost of repetition, instead of filing suit for specific performance or seeking the declaration qua subsistence of the agreement between the parties and challenging the act of the defendants, forfeiting the amount of earnest money, the plaintiff has simply filed the suit for recovery.
42. This Court has also to take the judicial notice of the fact that there is escalation in the prices of real estate and according to the clear intention of the parties, in this case, time was the essence of the contract. That is why a stipulation has been mentioned, in the agreement to sell, to forfeit the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 37 earnest money, in case of non-performance of the contract by the plaintiff.
.
43. The agreement between the parties was the agreement for sale of the immovable property and this amount was not given by the plaintiff as loan. It is not also pleaded by the plaintiff that he had lent this amount to the defendants, for which, he has a right to recover the amount, with interest.
44. The contents of para-9 of the plaint are also not liable to be accepted, as the plaintiff is having an equal and efficacious remedy of specific performance of the contract. But, instead of pursuing the said remedy, he has filed the suit for recovery, which is not maintainable, in view of the observations made above.
45. The relief sought by the plaintiff is not liable to be granted to him on another count also. When the relationship is governed by the agreement between the parties, then, setting the conditions, with regard to the GPA, as well as, getting the revenue record corrected, seems to be an afterthought story, as, there is nothing on the record, to show that the plaintiff had ever issued such notice, by bringing the above two facts, which are not the subject matter of the ::: Downloaded on - 29/12/2022 20:31:58 :::CIS 38 agreement, between the parties, to the knowledge of the defendants. The sole statement of the plaintiff is not liable to .
be accepted as gospel truth.
46. Considering all these facts, this Court is of the considered opinion that the learned trial Court has wrongly granted the relief of recovery to the plaintiff, as, this amount has already been forfeited, on account of the non-performance of the conditions of the document, which governs the relationship between the parties. Time was essence of the contract and the plaintiff has miserably failed to perform his part of contract and the suit of the plaintiff is liable to be dismissed.
47. In view of the above discussion, the appeal is allowed and the suit of the plaintiff is dismissed. Decree sheet be prepared accordingly.
48. Parties to bear their own costs.
( Virender Singh ) Judge December 23, 2022 ( rajni ) ::: Downloaded on - 29/12/2022 20:31:58 :::CIS