Punjab-Haryana High Court
Satya Pal Sharma And Another vs Jagjit Rai Verma on 4 January, 2012
Author: Ram Chand Gupta
Bench: Ram Chand Gupta
RSA No.4822 of 2001(O&M) -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
RSA No.4822 of 2001(O&M)
Date of Decision: January 4, 2012
Satya Pal Sharma and another
.....Appellants
v.
Jagjit Rai Verma
.....Respondent
CORAM: HON'BLE MR.JUSTICE RAM CHAND GUPTA
Present: Mr.M.L.Sarin, Senior Advocate with
Mr.Nitin Sarin and Ms.Diya Sodhi, Advocates
for the appellants.
Mr.Vivek Sethi, Advocate
for the respondent.
.....
RAM CHAND GUPTA, J.
The present regular second appeal has been filed against judgment and decree dated 20.11.2001 passed by learned Additional District Judge, Chandigarh, allowing appeal filed by respondent-plaintiff against judgment and decree dated 29.7.2000 passed by the Court of learned Additional Civil Judge (Senior Division), Chandigarh, dismissing suit filed by respondent-plaintiff and by reversing the said finding recorded by learned trial Court, suit filed by respondent-plaintiff for specific performance of agreement to sell dated 22.9.1993 of the property in dispute was decreed.
Briefly stated, respondent-plaintiff filed this suit for a decree for possession by way of specific performance of agreement to sell dated 22.9.1993 executed between the parties regarding House No.3452, Sector RSA No.4822 of 2001(O&M) -2- 23-D, Chandigarh, measuring 7-1/2 marlas, and in the alternative for recovery of `1 lac for damages for the breach of contract by respondents- defendants. It has been averred that respondent-plaintiff was in search of a house for his own living at Chandigarh and for that purpose he contacted M/s Shakti Property Dealers, Chandigarh, and he got agreement to sell dated 22.9.1993 executed between the parties. Appellants-defendants agreed to sell the said house for a consideration of `.8,40,000/- and a sum of `50,000/- was paid in cash as earnest money by respondent-plaintiff and the last date for execution of sale deed, on receipt of remaining sale consideration, was agreed to be 31.1.1994. As per terms and conditions of the agreement, appellants-defendants were to get the order of resumption of the house in dispute set aside from the competent authority and they were also to clear loan taken from the Estate Officer, Chandigarh Administration. They were also to obtain `No Objection Certificate' from Estate Officer, Chandigarh Administration, Chandigarh and `No Objection Certificate' from Income Tax authorities. However, time for execution of sale deed was extended initially from 31.1.1994 to 28.2.1994 vide writing dated 27.1.1994. Time was again extended upto 31.3.1994 and again upto 31.5.1994. Appellants-defendants obtained `No Objection Certificate' on 23.2.1994. On the request of appellants-defendants, draft sale deed for ostensible consideration of `4,50,000/- was signed by respondent-plaintiff and handed over to appellants-defendants. It has been averred that appellants-defendants had suggested to him that they would like to get the sale deed registered for an ostensible consideration of `4,50,000/- as in that manner they would save capital gains taxes, whereas, respondent-plaintiff would save by way of stamp duty for execution of the sale deed. RSA No.4822 of 2001(O&M) -3- Respondent-plaintiff was always ready and still ready to perform his part of the contract. He even wrote a letter dated 26.5.1994 to appellants- defendants and sent the same by registered AD post as well as by UPC calling upon appellants-defendants to execute and get registered the sale deed in respect of the house in dispute in his favour. He even attended the office of Sub Registrar on 31.5.1994 with a view to get the sale deed registered in his favour. However, appellants-defendants backed out from the bargain as the prices of the property appreciated in the meantime.
Further plea has been taken that time was not essence of the contract as the same was regarding the sale of immovable property and as is also evident from the fact that time for execution of sale deed was extended three times.
On notice being issued, appellants-defendants filed written statement admitting the factum of execution of agreement to sell dated 22.9.1993 between the parties. Plea has also been taken that as per terms and conditions of the agreement, the house in dispute was ordered to be restored vide order dated 17.1.1994. Plea has also been taken that the loan was raised by the previous owner. Further plea has been taken that the respondent-plaintiff was not ready and willing to perform his part of the contract and, in fact, proposed sale deed was handed over to them by respondent-plaintiff on 19.5.1994, which was not acceptable to them and he was told to bring the proposed sale deed for `8,40,000/- and as he did not bring the same upto 31.5.1994, i.e., the last date for execution of registration of sale deed, agreement to sell dated 22.9.1993 stood cancelled and earnest money stood forfeited as time was essence of the contract. However, the fact that time for execution of sale deed was extended from time to time has RSA No.4822 of 2001(O&M) -4- not been denied. Plea has also been taken that on 5.6.1994 they issued a telegram to respondent-plaintiff cancelling the agreement to sell and a notice dated 6.6.1994 was also sent to respondent-plaintiff through registered cover cancelling the said agreement. Hence, plea has been taken that respondent-plaintiff was not ready and willing to perform his part of the contract and hence, he is not entitled for discretionary relief of specific performance.
In replication, plea has been taken that agreement to sell dated 22.9.1993 could not be cancelled by appellants-defendants. He has admitted the receipt of telegram and notice regarding unilateral cancellation of agreement. However, plea has been taken that he was always ready and still ready to get the sale deed executed on sale consideration of `8,40,000/-, as per terms and conditions of the agreement and, however, appellants- defendants were not prepared to sell the house and refused to get the sale deed executed. It is denied that appellants-defendants ever asked him to furnish draft sale deed showing sale consideration of `8,40,000/-. Rather plea has been taken that he was having the consideration with him and was always ready and still ready to perform his part of the contract to get the sale deed executed and registered for sale consideration of `8,40,000/-.
From the pleadings of the parties, following issues were framed for adjudication by learned trial Court:-
"1. Whether the plaintiff has been ready and willing to perform his part of the contract? OPP.
2. Whether the plaintiff is entitled to the specific performance of the contract? OPP
3. Whether in the alternative the plaintiff is entitled to he RSA No.4822 of 2001(O&M) -5- recovery of Rs.1.00 lac as refund of the earnest money and an equal amount as damages? OPP
4. Whether the time was essence of the contract? If so, its effect? OPD 4A. Whether the agreement in question is not enforceable on the ground that it is in contravention of the provisions of Income Tax Act or another law for the time being in force ?
OPD.
5. Relief."
Parties adduced evidence in support of their respective contentions. Respondent-plaintiff appeared as his own witness as PW1. He also examined Shri Vinod Kumar Sharma, Clerk-cum-Cashier, from Allahabad Bank, Sector 17, Chandigarh, as PW2, and Des Raj, Clerk from Punjab National Bank, Sector 17-B, Chandigarh, as PW3.
On the other hand, appellants-defendants examined Shri Amar Nath, Registration Clerk as DW1. Satya Pal Sharma, one of the appellants- defendants, appeared as his own witness as DW2 and appellants-defendants also examined Shri B.R.Sharma, Income Tax Officer, as DW3.
Learned trial Court discussed issues no.1 to 3 together and decided the same against respondent-plaintiff and in favour of appellants- defendants by holding that respondent-plaintiff was not ready and willing to perform his part of the contract and hence, not entitled for specific performance of the contract.
Issue no.4 has been decided against present appellants- defendants and in favour of respondent-plaintiff by holding that as parties by their mutual consent extended date for registration of sale deed on three RSA No.4822 of 2001(O&M) -6- occasions, hence, it cannot be said that time for registration of sale deed was essence of contract.
Issue No.4-A was also decided in favour of respondent- plaintiff.
However, in view of finding on issues no.1 to 3, suit filed by respondent-plaintiff was dismissed with no order as to cost.
Aggrieved by the said judgment and decree passed by learned trial Court, respondent-plaintiff filed appeal before learned Additional District Judge, Chandigarh, which was accepted by learned first appellate Court and the finding recorded by learned trial Court on issues no.1 to 3 was reversed and it was held that respondent-plaintiff was always ready and willing to perform his part of the contract and that he was also possessed of sufficient means to pay the sale consideration on 31.5.1994 and hence, suit filed by respondent-plaintiff was ordered to be decreed.
Aggrieved against the said judgment and decree passed by learned first appellate Court, present appellants-defendants filed this regular second appeal.
I have heard learned counsel for the parties and have gone through the whole record carefully including both the judgments passed by learned Courts below.
It has been contended by learned counsel for the appellants- defendants that following substantial questions of law, arise for consideration in the instant appeal:-
"(i) Whether the Lower Appellate Court has acted illegally and without jurisdiction in reversing the well-considered judgment of the trial Court?RSA No.4822 of 2001(O&M) -7-
(ii) Whether the Lower Appellate Court has exceeded its jurisdiction in interfering in the exercise of discretion by the trial Court, without ever finding that such exercise of discretion was arbitrary or perverse?
(iii) Whether the Lower Appellate Court has misdirected itself, exceeded its jurisdiction, misread the pleading and evidence and misapplied the law, in holding that the plaintiff-
respondent had proved his readiness and willingness to perform his part of the agreement, when the trial Court had rightly found to the contrary?
(iv) Whether the Lower Appellate Court could have decreed specific performance where on his own admission the plaintiff-respondent was insisting on getting a sale deed executed for a deficient amount of Rs.4.5 lakhs instead of the agreed Rs.8.4 lakhs?
(v) Whether the plaintiff can specifically enforce a (written) contract, which he himself repudiates by pleading an oral contract at substantial variance therewith?
(vi) More particularly, whether a plaintiff can specifically enforce a (written) contract, which he himself repudiates by pleading an unlawful and illegal oral contract at substantial variance therewith?
(vii) Whether a plaintiff who admits to pursuing a criminal and fraudulent conduct in the implementation of an agreement he seeks to enforce, be granted the discretionary relief of specific performance?
RSA No.4822 of 2001(O&M) -8-
(viii) Whether a plaintiff who, as per his own case, insists on executing a registered sale deed for Rs.4.5 lakhs instead of the agreed amount of Rs.8.4 lakhs invites the bar of S.16(b) of the Specific Relief Act, 1963 for violation of an essential term of the contract and secondly the bar of S.16(c ) of the Specific Relief Act, 1963, for unreadiness and unwillingness to perform his part of the agreement?
(ix) Whether the plaintiff can be said "ready" to execute the sale agreement i.e. whether he had the resources to pay the total consideration and stamp fee, on the material dates, when the evidence, rightly appreciated by the trial Court, shows him having a substantially deficient amount?
(x) Whether a plaintiff who manufactures false evidence of sufficiency of funds by transferring amounts from one account to another, is entitled to the discretionary relief of specific performance?
(xi) Whether the Lower Appellate Court can explain away the deficiency in funds available with the plaintiff, by surmising that he would have borrowed the remaining amount, when this is not even the plaintiff's pleaded case?
(xii) Whether specific performance ought to have been decreed in view of the well-established principals of law and equity?
(xiii) Whether in decreeing specific performance the Lower Appellate Court has acted contrary to S.10, S.14, S.16 and S.20 of the Specific Relief Act?
RSA No.4822 of 2001(O&M) -9-
(xiv) Whether the Lower Appellate Court could have drawn adverse inference from the fact that he stated in oral evidence that was not ready to sell the suit property "today"' when he has categorically stated that he has always remained ready and willing to perform his part of the agreement, on all material dates?
(xv) Whether the Lower Appellate Court could have relied on a line in an agreement, which line stands struck off and cancelled by the parties?
(xvi) Whether the findings of the lower appellate Court are perverse being beyond the pleadings and evidence on the record and the law applicable thereto?"
Appeal was admitted for hearing by a coordinate Bench of this Court vide order dated 21.4.2003.
It has been vehemently contended by learned counsel for the appellants-defendants that the time was essence of the contract and that learned trial Court committed illegality in deciding the said issue against appellants-defendants. It is further contended that learned first appellate Court also committed illegality in not considering the plea of appellants-
defendants for reversing the finding of learned trial Court on the said issue on the plea that no cross-appeal/cross-objections were filed and hence, acted in ignorance of provision of Order 41 Rule 22 and Rule 33 of the Code of Civil Procedure. On the point he has also placed reliance upon Ravinder Kumar Sharma v. Sate of Assam and others 2000(2) PLR 165.
It is further contended that as respondent-plaintiff failed to pay the remaining sale consideration upto extended date, as agreed between the RSA No.4822 of 2001(O&M) -10- parties, i.e., upto 31.5.1994, the agreement was rightly repudiated by appellants-defendants vide telegram dated 6.6.1994.
On the other hand, it has been contended by learned counsel for the respondent-plaintiff that execution of agreement between the parties is not disputed. It is further contended that there is no dispute that the time for registration of sale deed was extended three times with mutual consent of the parties and hence, it is contended that on these facts, it cannot be said that the time was essence of the contract.
It is pertinent to reproduce the terms and conditions of agreement, Ex.P1, which was admittedly executed between the parties, which read as under:-
"1. That the total sale price of the above said house has been fixed at Rs.8,40,000/- (Rupee Eight lacs and forty thousand only).
2. That the said purchaser has paid to the said sellers a sum of Rs.50,000/- (Rupees Fifty thousand only) in cash in the shape of currency notes as earnest money and the said sellers hereby acknowledge the receipt of the said amount in the presence of marginal witnesses.
3. That the balance amount after deducting the earnest money will be paid by the purchaser to the sellers before the Sub Registrar, Chandigarh, at the time of the registration of the sale deed.
4. That all the expenses on the registration of the sale deed, i.e., cost of stamp papers and registration fee shall be borne by the purchaser alone.RSA No.4822 of 2001(O&M) -11-
5. That the purchaser can get the sale deed registered in his own name or in the name of his nominee's or any other person or persons whomsoever at his own discretion and the said sellers shall have no objection for the same at any later stage.
6. That the last date for the registration of the sale deed has been fixed on or before 31st of January, 1993.
7. That the said sellers shall hand over the entire vacant possession of the above said house to the purchaser at the time of the registration of the sale deed.
8. That the said sellers shall hand over all the papers and documents relating to the title of the said house in original to the purchaser at the time of the registration of the sale deed.
9. That the said sellers shall apply for and obtain clearance certificate to sell the said house from the Estate Officer, Chandigarh, and Income Tax Clearance Certificate from the Income Tax Deptt. concerned before the registration of the sale deed as required under the existing rules.
10. That the said house has been resumed by the Estate Officer, Chandigarh on ground of building violation, the said sellers shall get the house restored before the registration of the sale deed.
11. That this bargain has been struck with the best efforts of M/s Shakti Property Dealers House No.1922, Sector 22-B, Chandigarh, to whom both the parties shall pay 2% commission separately on the total consideration amount. RSA No.4822 of 2001(O&M) -12-
12. That in case the purchaser back out of this bargain then his earnest money shall stand forfeited in favour of the sellers.
13. That in case the sellers back out of this bargain or fails to complete their part of contract, then they shall be liable to repay the earnest money received by them plus an equal amount as damaged to the purchaser without any hesitation and delay, but it shall be the option of the purchaser either to accept the damages or to get the sale deed registered through Court of law under the Specific Performance of Relief Act at the risk and cost of the sellers......"
There is also no dispute that `50,000/- were received by present appellants-defendants vide receipt Ex.P2 as earnest money. There is also no dispute that vide another writing Ex.P3, dated 27.1.1994, time for execution of sale deed was extended upto 28.2.1994. A careful perusal of Ex.P3 shows that though it was typed that the time was being extended as the sellers could not obtain necessary permission to sell the said house from Estate Office, Chandigarh, and Income Tax Clearance Certificate from Income Tax Department and, however, those lines were later on cut, which means that no reason was assigned for extending the date for registration of sale deed. Another writing Ex.P4 was executed between the parties extending the time for registration of sale deed to 31.3.1994 again without assigning any reason. Another writing Ex.P5 was executed between the parties on 28.3.1994, further extending the time for registration of sale deed to 31.5.1994, without assigning any reason.
It is also pertinent to mention here that as per terms and conditions of the agreement, appellants-defendants were required to perform RSA No.4822 of 2001(O&M) -13- certain acts before the sale deed could be executed and registered, whereas only obligation on the part of respondent-plaintiff was to pay the balance sale consideration at the time of registration of sale deed.
Admitted facts are that the house in dispute was restored by Estate Officer, Chandigarh, on 18.1.1994. No objection certificate was obtained by appellants-defendants from Estate Officer, Chandigarh on 23.2.1994. The house was got redeemed by appellants-defendants on making payment of the outstanding loan on 4.3.1994. However, the Income tax clearance cold not be obtained upto 31.5.1994. Hence, though no reason has been mentioned for extension of time for execution of registration of sale deed, these facts show that the time was extended from time to time as appellants-defendants failed to get the requisite clearance from Estate Officer, Chandigarh and from Income Tax Department.
Hence, in view of these facts, it has been rightly held by learned trial Court that time was not essence of the contract. Though it has been mentioned by learned first appellate Court that finding on the said issue could not be challenged by present appellants-defendants without filing cross appeal/cross objections and, however, there is no merit in the contention of learned senior counsel for the appellants-defendants that on the facts and circumstances of the case, as narrated above, time was essence of the contract.
Law on the point has been well settled by Hon'ble Apex Court in P.Purushottam Reddy and another v. M/s Pratap Steels Ltd., AIR 2002 Supreme Court 771, on which reliance has also been placed by learned Senior counsel for the appellants-defendants. Relevant paragraphs of the same read as under:-
RSA No.4822 of 2001(O&M) -14-
"8. For the purpose of deciding the question whether or not time was the essence of the contract the appellant before the High Court relied on K.S. Vidyanandam and Ors. v.Vairavan
- (1997) 3 SCC 1 which is a two-Judge Bench decision and a few other decided cases. On behalf of the plaintiff-respondent reliance was placed on Chandnee Widya Vati Madden v. C.L. Katial and Ors. - [1964]2SCR495 , which is a three- Judge Bench decision. The High Court noticed the facts of both these decisions, and having also dealt with the law laid down therein felt inclined to decide the case in the light of the law laid down in Chandnee Widya Vati's case because the decision in Chandnee Widya Vati's case was, as stated by the High Court, "the earlier larger Bench judgment". The attention of the High Court was not invited to a Constitution Bench decision in Chand Rani (Smt.)(Dead) by Lrs. v. Kamal Rank (Smt.)(Dead) by Lrs.- (1993) 1 SCC 519 and therefore the law laid down by the Constitution Bench has escaped the attention of the High Court. The issue as to whether time is the essence of the contract in contracts for sale of Immovable property came up for the consideration of the Constitution Bench and it was held:-
"It is a well-settled 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 the 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." RSA No.4822 of 2001(O&M) -15-
xxx xxx xxx ".....in the case of sale of immovable property there is no presumption as to time being the 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:
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."
9. Vide para 29, the Constitution Bench on an analysis of evidence, concluded that though as a general proposition of law time is not the essence of the contract in the case of sale of Immovable property yet the parties intended to make time as the essence under Clause (1) of the suit agreement. This Constitution Bench decision in Chand Rani's case was placed before and followed by the two-
Judge Bench deciding Vidyanadam's case. The High Court ought to have noticed the Constitution Bench decision, while dealing with the facts and circumstances of the present case as emerging from evidence and then decided the case in the light of the law handed down by the Constitution Bench."
Law is well settled that in case of sale of immovable property, time is never regarded as essence of the contract. Rather there is presumption against the time being essence of the contract. However, Court may infer that it is to be performed in a reasonable time from the expressed terms of the contract, from the nature of the property and from other surrounding circumstances. However, in the present case, as is clear from the terms and conditions of the agreement to sell, as reproduced above, as well as from the subsequent conduct of the parties by extending the time for execution of registration of sale deed from time to time, it cannot be said RSA No.4822 of 2001(O&M) -16- that time was essence of the contract.
On the point reliance has been placed upon judgment rendered by a coordinate Bench of this Court in Sawaran Singh and another v. Pawan Kumar 1999(1) PLR 372. In that case as well period for execution of sale deed was extended at the convenience of the parties and hence, it was observed that conduct of parties shows that the time was not treated as essence of the contract. Relevant paragraph of the same reads as under:-
"5. Once the learned courts below have come to a concurrent finding of facts that the agreement dated 4.6.1985 was not result of a fraud and in fact had been executed between the parties and proved in accordance with law, in that event hardly there is a scope for believing the version put forward by the appellant. The respondent has specifically pleaded and averred in evidence that the agreement to sell was executed on 4.6.1985 and the sale deed was to be executed on or before 3.6.1986. Additional sum of ` 5,000/- was paid on 3.6.1986, which was the date fixed for execution of the sale deed and the time was extended for execution of the sale deed till 3.6.1987. Even in this regard, a receipt was duly executed being Ex.P2/A. Thus, agreement to sell, Ex.P.2 and the period specified therein stood extended by Ex.P.2/A. This period was further extended by Ex.P.2/B till 2.6.1988. In other words, the parties never treated as time to be the essence of the contract and the period was extended at the convenience of the parties even on the last date specified in the said agreement. The conduct of the parties seen in the light of the documents above-referred least indicates a definite intention on the part of the parties to treat the time to be essence of the contract. The lack of definite intention and unequivocal agreement to abide by the time specified in the agreement certainly remains much below the required standard of believing and proving in the present case. This has to be seen in the light of the fact that out RSA No.4822 of 2001(O&M) -17- of total sale consideration of ` 40,503/-, a sum of ` 30,000/- was received on the date of agreement while additional sum of `5,000/- was received on 3.6.1986. Thus, substantial part of the total consideration agreed was paid during the operation of the agreement. Furthermore, the respondent had issued a notice Ex. PA on 3.6.1988 itself reminding the appellant that the respondent was ready and willing to perform his part of the obligation arising from the contract but it was the appellant, who was trying to avoid completion to the terms of the agreement. Ex.PA was received but remained unreplied by the appellant. The respondent further specifically led evidence to show that he waited at the Sub-Registrar's Office, Kapurthala from 9.00 a.m. to 2.00 p.m. on 2.6.1988. This was also so stated in the notice. The plaintiff had examined himself, PW-2 and PW-3 to prove the agreement and the nothings Ex.P2/A and Ex.P2/B and the notice Ex.PA. This documentary evidence seen in the background of the statement made and the pleadings of the parties can only lead to one conclusion that the judgment of the learned Courts below are not liable to be interfered with either on the finding of facts or on in any well settled principle of law. The learned counsel for the appellant has not been able to show as to how the judgments or the findings arrived at by the learned courts below could be stated to be perverse. The appellant hardly led any documentary or oral evidence to substantiate the vaguely pleaded facts. It is a settled principle of law that the facts in relation to fraud or forgery should be specifically pleaded and proved. In the present case, no specific fact has been averred nor any evidence was led to prove the plea of fraud. As is clear from the aforestated issues, the appellant did not even press for an issue on the ground of fraud, though issue No. 2 was re-framed by the learned trial court vide its order dated 20.7.1993 with regard to incorporation of Ex.P2/A and extension of date on 2.6.1987. In a suit for specific performance, the conduct of the parties immediately after presenting the suit and even during RSA No.4822 of 2001(O&M) -18- the pendency of the suit is a relevant consideration which the court ought to take into consideration for exercising its discretion within the scope of Section 20 of the Specific Relief Act. As already discussed above, the conduct of the parties shows that the time was not treated as essence of the contract but even if so treated, no breach thereof can be attributed at least to the respondent herein."
In the present case as well, time was extended from time to time with mutual consent of the parties. Some conditions were to be performed by present appellants-defendants before the sale deed could be executed and registered. There was no obligation on the respondent-plaintiff except that he was to make payment of remaining sale consideration at the time of execution and registration of sale deed. Hence, it cannot be said that any illegality has been committed by learned Courts below in deciding the said issue against present appellants-defendants.
It has been further vehemently contended by learned senior counsel for the appellants-defendants that appellate Court committed illegality in coming to the conclusion that respondent-plaintiff was ready and willing to perform his part of the contract. Rather it has been contended that respondent-plaintiff was not having balance consideration with him and that rather he had given draft sale deed Ex.D1 to appellants-defendants for `4.5 lakhs only instead of `8.4 lakhs, as fixed in the agreement Ex.P1 and that this very fact shows that he was not ready and willing to perform his part of the contract for getting the sale deed executed and registered on payment of `8.4 lakhs instead of `4.5 lakhs. It is further contended that well reasoned judgment passed by learned trial Court on the point has been reversed by learned first appellate Court without giving any cogent reasons. He has contended that appellants-defendants could not obtain requisite RSA No.4822 of 2001(O&M) -19- clearance certificate from Income Tax Authorities as for getting clearance from income tax authorities, copy of proposed sale deed is to be attached as per Section 230-A of the Income Tax Act 1961 and as per Rule 44-A of the Income Tax Rules and as prescribed in application Form No.34-A and as copy of sale deed was not supplied by respondent-plaintiff to appellants- defendants, they could not apply for the same and that proposed sale deed Ex.D1 for sale consideration of only `4.5 lakhs as given by respondent- plaintiff to appellants-defendants was not acceptable to them.
On the other hand, it has been contended by learned counsel for the respondent-plaintiff that no such notice was ever issued to respondent- plaintiff by appellants-defendants demanding draft sale deed for `8.4 lakhs for applying for getting income tax clearance certificate before 31.5.1994 despite the fact that notice was issued by respondent-plaintiff to appellants- defendants calling upon them to get the sale deed executed and registered for sale consideration of `8.4 lakhs and despite the fact that respondent- plaintiff remained present in the office of Sub Registrar for that purpose and, however, appellants-defendants did not come present. It is further contended that Ex.D1 was signed by respondent-plaintiff in good faith on the asking of appellants-defendants and that the same was given to appellants-defendants by respondent-plaintiff even before expiry of initial period fixed for execution of registration of sale deed in the agreement, i.e., 31.1.1994 and, however, no notice was issued by appellants-defendants requiring respondent-plaintiff to give another sale deed for consideration of `8.4 lakhs. It is further contended that first appellate Court has rightly accepted the version of respondent-plaintiff that Ex.D1 was signed by respondent-plaintiff in good faith on the asking of appellants-defendants. It RSA No.4822 of 2001(O&M) -20- is also contended that respondent-plaintiff never intended to get the sale deed executed and registered for amount less than the fixed in the agreement and that the said fact is also proved from the registered notice issued by respondent-plaintiff to appellants-defendants before 31.5.1994, in which he has mentioned the sale consideration as `8.4 lakhs only.
It is pertinent to reproduce Section 16 of the Specific Relief Act, 1963, which reads as under:-
"16.Personal bars to relief .- Specific performance of a contract cannot be enforced in favour of a person--
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or as in fraud of the contract, or willfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.
Explanation.--For the purposes of clause(c),-- (I) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction."
Among the three sub Sections, this Court is concerned with Sub Section `c' (so far as the present case is concerned). This clause provides that the persons seeking specific performance must prove that he RSA No.4822 of 2001(O&M) -21- has performed or has been ready and willing to perform the essential terms of the contract, which are to be performed by him.
Law has been well settled by Hon'ble Apex Court on the point in a latest judgment rendered in J.P.Builders and another v. A.Ramadas Rao and another, (2011) 1 SCC 429, relevant paragraphs of which read as under:-
"9. The words "ready" and "willing" imply that the person was prepared to carry out the terms of the contact. The distinction between "readiness" and "willingness" is that the former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness.
10. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao and Ors. MANU/SC/0025/1996 : (1995) 5 SCC 115 at para 5, this Court held:
...Section 16(c) of the Act envisages that plaintiff must plead and prove that he had 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 those terms the performance of which has been prevented or waived by the defendant. 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 alongwith other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution RSA No.4822 of 2001(O&M) -22- 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 always ready and willing to perform his part of the contract.
11. In P. D'Souza v. Shondrilo Naidu MANU/SC/0561/2004 : (2004) 6 SCC 649 paras 19 and 21, this Court observed:
It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the facts and circumstance of each case. No strait-jacket formula can be laid down in this behalf.... The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale.
12. Section 16(c) of the Specific Relief Act, 1963 mandates "readiness and willingness" on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. It is also clear that in a suit for specific performance, the plaintiff must allege and prove a continuous "readiness and willingness" to perform the contract on his part from the date of the contract. The onus is on the plaintiff. It has been rightly considered by this Court in R.C. Chandiok and Anr. v. Chuni Lal Sabharwal and Ors. MANU/SC/0033/1970 : (1970) 3 SCC 140 that "readiness and willingness" cannot be treated as a straight jacket formula. This has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned. It is settled law that even in RSA No.4822 of 2001(O&M) -23- the absence of specific plea by the opposite party, it is the mandate of the statute that plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties."
Hence, there cannot be any straight jacket formula for deciding in a particular case as to whether respondent-plaintiff was ready and willing to perform his part of the contract. The same has to be determined from entirety of the facts and circumstances, relevant to the intention and conduct of the party concerned.
In Azhar Sultana v. B.Rajamani and others, AIR 2009 Supreme Court 2157, it was observed by Hon'ble Apex Court that it was not necessary that entire amount of consideration should be kept ready by the respondent-plaintiff to show that he was ready and willing to perform his part of the contract and he is not required to show proof in respect thereof. Relevant paragraph of the same reads as under:-
"20. We are, however, in agreement with Mr. Lalit that for the aforementioned purpose it was not necessary that the entire amount of consideration should be kept ready and the plaintiff must file proof in respect thereof. It may also be correct to contend that only because the plaintiff who is a Muslim lady, did not examine herself and got examined on her behalf, her husband, the same by itself would lead to a conclusion that she was not ready and willing to perform her part of contract."
In Sukhbir Singh and others v. Brij Pal Singh and others, RSA No.4822 of 2001(O&M) -24- (1997) 2 SCC 200, it was observed by Hon'ble Apex Court that when respondent called the petitioner to attend Sub Registrar Office for execution of sale deed and petitioner did not go there and avoided his part of the agreement and respondent was ready to pay consideration amount at that time, the inference can be drawn that respondent was always ready to perform his part of the contract and it was other party who was not ready to perform the contract. Relevant paragraph of the judgment reads as under:-
"5. Law is not in doubt and it is not a condition that the respondents should have ready cash with them. The fact that they attended the Sub-Registrar's office to have the sale deed executed and waited for the petitioners to attend the office of the Sub-Registrar is a positive fact to prove that they had necessary funds to pass on consideration and had with them the needed money with them for payment at the time of registration. It is sufficient for the respondents to establish that they had the capacity to pay the sale consideration. It is not necessary that they should always carry the money with them from the date of the suit till date of the decree. It would, therefore, be clear that the courts below have appropriately exercised their discretion for granting the relief of specific performance to the respondents on sound principles of law."
Hence, in the light of the above proposition of law, this Court is to see as to whether respondent-plaintiff has established his case for decree for specific performance and as to whether any illegality has been committed by learned first appellate Court in reversing the finding recorded by learned trial Court on the point.
In this case, admittedly, time for execution and registration of sale deed was extended upto 31.5.1994. However, before expiry of that date, respondent-plaintiff had sent registered notices Ex.P6 and Ex.P6/1 RSA No.4822 of 2001(O&M) -25- vide postal receipts Ex.P7 and Ex.P8 and vide UPC Ex.P9. Registered AD covers Ex. P10 and Ex.P11 were returned by the postal authorities with the averment that the addressees were not found present. However, notice sent through UPC was not returned and the requisite presumption can be drawn that the same must be received by the addressee. Even if plea of learned Senior Counsel for the appellants-defendants that notices were never received by them is accepted, contents of notices Ex.P6 and Ex.P6/1, which were sent before expiry of stipulated date by respondent-plaintiff show that it was made clear by respondent-plaintiff that he was ready and willing to perform his part of the contract and to get the sale deed executed and registered for sale consideration of `8.4 lakhs, as stipulated in the agreement. Hence, this fact shows that intention of respondent-plaintiff was to perform his part of the contract. He also attended office of Sub Registrar, U.T., Chandigarh, on the stipulated date, i.e., on 31.5.1994. He has also proved affidavit Ex.P12 in this regard to show that he remained present in the office of Sub Registrar, U.T., Chandigarh, and however, appellants- defendants did not come present to get the sale deed executed and registered in his favour on receipt of remaining sale consideration. Respondent- plaintiff has also been able to prove that he was possessed of `7,94,265.18, which was lying in his bank account as on 31.5.1994. Hence, it has been rightly observed by learned first appellate Court that respondent-plaintiff was not required to prove the source of remaining consideration for paying stamp and registration charges as he has been able to show that substantial amount for making payment of remaining sale consideration was ready with him. Case of respondent-plaintiff cannot be thrown out merely on the ground that he submitted draft Ex.D1 for `4.5 lakhs allegedly on the asking RSA No.4822 of 2001(O&M) -26- of present appellants-defendants. Moreover, if the entire facts and circumstances of the case are considered in its totality, the only inference which can be drawn is that respondent-plaintiff was ready and willing to perform his part of the contract and that present appellants-defendants unilaterally cancelled the agreement vide notice dated 6.6.1994 in a haste, without even asking respondent-plaintiff to deliver draft sale deed for `8.4 lakhs for obtaining clearance certificate from the income tax authorities.
It has been further contended by learned senior counsel for the appellants -defendants that decree for specific performance is a discretionary relief and that in view of the fact that about 18 years have expired since the agreement was executed between the parties on 22.9.1993 and as the prices have increased manifold, comparative hardship to the parties to be looked into and that it is not such a case in which discretionary relief for specific performance should be granted in favour of respondent- plaintiff.
On the point he has also placed reliance upon V.Muthusami (dead) by L.Rs. v. Angammal and others, AIR 2002 Supreme Court 1279 and Lourdu Mari David and others v. Louis Chinnaya Arogiaswamy and others AIR 1996 Supreme Court 2814.
So far as legal proposition held in the aforesaid authorities are concerned, there is no dispute. However, none of the said authorities are applicable to the facts of present case.
In this case, as already discussed above, appellants-defendants were in a haste in unilaterally repudiating the contract despite the fact that time for execution of sale deed was extended three times with mutual consent of the parties. No notice in writing was issued by appellants- RSA No.4822 of 2001(O&M) -27- defendants to respondent-plaintiff asking him to supply copy of draft sale deed for `Rs.8.4 lakhs for obtaining income tax clearance certificate despite the fact that notice was issued by respondent-plaintiff to appellants- defendants before 31.5.1994 requiring present appellants-defendants to get the sale deed executed and registered for sale consideration of `8.4 lakhs.
Hence, in view of these facts merely on the ground that there was delay in the Courts for finally deciding the matter, it cannot be said that respondent-plaintiff is not entitled for discretionary relief of specific performance of the contract. No fault can be found with respondent- plaintiff in not getting the sale deed executed and registered within the stipulated period fixed in the agreement. Respondent-plaintiff did not waste any time in approaching this Court for getting relief of specific performance immediately on receipt of notice dated 6.6.1994 from appellants-defendants repudiating the agreement. The present suit was filed on 13.6.1994.
Observations of Hon'ble Apex Court on the point in S.V.R.Mudaliar (Dead) by Lrs. and others v. Rajabu F.Buhari (Mrs) (Dead) by Lrs. and others, AIR 1995 SC 1607 are relevant, which reads as under:-
"27. In so far as the delay in the disposal of the case and the rise in price during interregnum, Shri Parasaran urges that the delay not having been occasioned by any act of the plaintiff, he may not be punished for the same on the principle of "actus curiae neminem gravabit' - an act of the court shall prejudice no man. As regards the rise in prices, the submission is that it should not weigh with the court in refusing the relief if otherwise due, as opined in S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar MANU/TN/0191/1952 : AIR1952Mad389 , which decision was cited with approval in Mir Abdul Hakeem Khan v.RSA No.4822 of 2001(O&M) -28-
Abdul Mannan Khadri MANU/AP/0142/1972 :
AIR1972AP178 . We are in agreement with this view because of the normal trend of rise in prices of properties situate especially in metropolitan city like Madras, where the property in question is situate. If merely because the prices have risen during the pendency of litigation, we were to deny the relief of specific performance if otherwise due, this relief could hardly be granted in any case, because by the time the litigation comes to an end sufficiently long period is likely to elapse in most of the cases. This factor, therefore, should not normally weigh against the suitor in exercise of discretion by a court in a case of the present nature."
Hence, merely on the ground that prices have arisen during the pendency of litigation, relief of specific performance cannot be denied to respondent-plaintiff.
Learned Senior counsel for the appellants-defendants has also placed reliance upon a recent judgment rendered by Hon'ble Apex Court in M/s Citadel Fine Pharmaceuticals v. M/s Ramaniyam Real Estates P.Ltd. and another, JT 2011 (9) SC 265, wherein on the terms and conditions of the agreement in dispute, it was held that time was essence of the contract and hence, cancellation of contract by vendor after expiry of the time was held fully justified. However, in the present case, it cannot be said that time was essence of the contract, as already discussed above.
Learned Senior Counsel for the appellants-defendants has also placed reliance upon Suraj Lamp & Industries Pvt.Ltd. v. State of Haryana and another, JT 2011 (12) SC 564, wherein it was held by Hon"ble Apex Court that transfer of immovable property by way of sale can only be by way of a deed of conveyance (sale deed) and in the absence of a deed of conveyance (duly stamped and registered as required by law), no RSA No.4822 of 2001(O&M) -29- right, title or interest in an immoveable property can be transferred. However, the said legal proposition is of no help to present appellants- defendants in this case as the same is for relief of specific performance of agreement to sell and respondent-plaintiff is ready to get executed and registered the sale deed by paying the requisite stamp duty and registration charges, as per law.
Hence, in view of my above discussion, all the aforementioned substantial questions of law, as framed by learned senior counsel for the appellants-defendants are decided against appellants-defendants and in favour of respondent-plaintiff.
As a sequel to my above discussion, there is no merit in the present appeal and the same is, hereby, dismissed.
However, in view of peculiar circumstances of the case, parties are left to bear their own costs.
4.1.2012 (Ram Chand Gupta) meenu Judge
Note: Whether to be referred to Reporter? Yes/No.