Punjab-Haryana High Court
Bhagwan Singh vs Teja Singh Alias Teja Ram on 6 January, 1994
Equivalent citations: AIR1995P&H64, AIR 1995 PUNJAB AND HARYANA 64, (1996) 3 LANDLR 487, (1994) 2 CIVLJ 328, (1994) 1 CURLJ(CCR) 653, 1994 REVLR 1 306, (1994) 2 LJR 47, (1994) 2 RRR 113
JUDGMENT
1. This appeal has arisen out of a suit for possession by specific performance. It is directed against the judgment and decree of the Courts below dismissing the suit by recording a concurrent finding.
2. The sole controversy in this appeal is whether time was the essence of the contract and the suit is barred by time. In order to understand the controversy, it will be apposite to notice some fads. Teja Singh, defendant purchased suit land from the Rehabilitation Department in auction held on August 12, 1986. He paid the entire consideration. He either did not get the sale certificate or obtained the same from the Rehabilitation authorities. Teja Singh vide agreement dated August 1, 1973, Exhibit P-1 agreed to sell this land measuring 46 kanals 13 marlas to Bhagwan Singh plaintiff for a sum of Rs. 30,000/-. Under the agreement, it was the responsibility of Teja Singh to obtain the sale certific'ate from the Rahabilitation Department and also to'get a path of the size of 9 marlas from Amar Singh and Ram Chander. A sum of Rs. 11,500/- was received by Teja Singh as earnest money on the date of agreement and executed a receipt for the same in token thereof. It was further agreed that sale deed would be executed by August 15, 1976 at alt costs. A further sum of Rs. 1000/- was paid to Teja Singh out of the remaining sale consideration on February 18, 1974. Bhagwan Singh also pleaded that he was always ready and willing to perform his part of the agreement whereas Teja Singh failed to do so inasmuch as he did not obtain sale certificate and did not inform him about it till the filing of suit. It is also the case of Bhagwan Singh that he paid another sum of Rs. 5015/- in a suit titled 'Puran Chand v. Teja Singh' (Civil Suit No. 647 of 1974) on behalf of Teja Singh in order to save a pan of the suit land from sale in execution of the decree. Notice sent to Teja Singh to execute sale deed evoked no response. This is what forced Bhagwan Singh to file the suit on the above allegations.
3. Teja Singh defendant contested the suit. Few preliminary objections were raised. It was also pleaded that the suit was premature as some of the provisions in the agreement, though denied, were conditions precedent for execution of the sale deed and the said conditions did not exist even at the time of filing of the suit. On merits, it was pleaded that only a sum of Rs. 5000/- was received at t he time of agreement and that the obligations, as detailed in the agreement were to be performed by the defendant before August 15. 1976 and the sale was to be completed by August 15, 1976 at all costs. In the circumstances, it was pleaded that the time was essence of contract. Defendant also pleaded that specific performance of the agreement would cause hardship to him.
4. On the pleadings of the parties the following issues were framed:
1. Whether the defendant agreed to sell land measuring 46 kanals 13 marlas mentioned in para No. 1 of the plaint to the plaintiff vide agreement dated 31-8-1973 for Rs. 30,000/-? If so, to what effect? OPDP
2. Whether the sale deed was to be executed by 15-8-76 subject to the conditions mentioned in the agreement dated 31-8-1973? OPD
3. Whether the suit is within time? OPD
4. Whether the suit is not maintainable being premature? OPD
5. Whether the specific performance of the contract shall cause acute hardship to the defendant? If so, to what effect? OPD
6. Whether the plaintiff deposited a sum of Rs. 5015/- in execution of civil suit No. 647 of 1974? If so, to what effect? OPD
7. Relief.
5. The trial Court came to the conclusion that the defendant had agreed to sell the land in suit for Rs. 30,000/- to the plaintiff and executed agreement, Exhibit P-1 dated August 31, 1973 in that behalf after receiving a sum of Rs. 11,500/-. Under issue No. 2, a finding was returned that sale deed was to be executed by August 15, 1976 in all circumstances and this was not subject to any condition. Issue No. 2 was thus decided in favour of the defendant. As a result of the finding under Issue No. 2 and even otherwise the suit was held to be barred by time, the same having been filed on July 22, 1981 whereas the cause of. action accrued on August 16, 1976. Objection raised by the defendant and covered by Issue No. 4 was answered against the defendant by holding that the suit was not premature, but was barred by limitation. Issue No. 5 was also answered against the defendant and in favour of the plaintiff by holding that specific performance of contract shall not cause acute hardship to the defendant. Under Issue No. 6, it was held that the plaintiff had deposited a sum of Rs. 5015/- on behalf of the defendant in execution of a decree passed in Civil Suit No. 647 of 1974 but the plaintiff was not entitled to recover the same from the defendant. With the above findings, the suit was dismissed.
6. Challenge to the findings at the instance of the plaintiff before the lower appellate Court did not meet with success. Hence this second appeal.
7. Learned counsel for the appellant vehemently contended that having regard to the stand of the defendant that the suit was premature and on a harmonious construction of the agreement to sell Ex. P-1 it cannot be said that the time was the essence of the contract, especially when in the case of sale of immoveable property the time is normally not the essence of the contract. Learned counsel further submitted that the Courts below have erred in holding that the suit was barred by time.
8. In the case of sale of the immoveable property lime is normally not the essence of the contract unless there are strong indica-
tions to show to the contrary that the parties to the agreement intended to have time as the essence of the contract of sale. In Gomathi-nayagam Pillai v. Palaniswami Nadar, AIR 1967 SC 868 one of the questions that fell for determination was, whether the time was the essence of the agreement. The Apex Court after noticing the provisions of Section 55 of the Contract Act observed (at p. 870-871):
"It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable; it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence."
In the above case the agreement provided that sale deed would be executed on or before April 15, 1959. The default clause in imposing the penalty upon the party failing to carry out the terms of the contract had also been provided in the agreement to sell. The time was extended up to April 13, 1959 and in default the parties agreed to bind themselves by the conditions mentioned in the previous agreement. The sale was not completed. A dispute having arisen between the parties, the question posed was answered in the above terms.
9. Again in Govind Prasad v. Hari Dutt, AIR 1977 SC 1005, the same question, namely, whether the time was the essence of the contract fell for consideration. In that case the agreement provided that sale must be got executed within two months i.e. up to 24th May, 1964 and in case of default the earnest money would stand forfeited without serving any notice. In this situation it was held (at pp. 1007, 1008):
"It is settled law that the 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. When a contract relates to sale of immoveable property it will normally be presumed that the time is not the essence of the contract (vide Gomathinayagam Pillai v. Palaniswami Nadar, (1967) 1 SCR 227 at page 233 : AIR 1967 SC 868 at page 871. It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract. The intention to treat time as the essence of the contract may be evidenced by circumstances which are sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract."
10. Before adverting to the facts of the present case, the guidelines of the Supreme Court in the matter of interpretation of documents may also be noticed. In Tamboli Raman Lal Motilal v. Ghanchi Chimanlal Keshavlal, 1992 (2) Rev LR 261 : (AIR 1992 SC 1236), it was observed that one should be guided by the terms of the agreement alone without much help from, the case law. In .Deokabai v. Uttam, (1993) 4 SCC 181, it was observed as under:--
"It is well settled that the terms of a document, like the present one, have to be read as a whole. The document as translated, though wrongly at certain places, figures an pp. 45 to 47 of the paper book. Taking out a term in isolation and giving it a meaning torn from the context may tend to lead to a wrong interpretation causing injustice. The term afore extracted is followed by a term which may lend some colour to the construction. That is (as translated by us from Hindi):
"The entire cost of registration of the sale deed of this house shall be borne by you. In case there is any complication or difficulty in getting the sale deed of this house registered in your name or in case it becomes legally impossible for me to get the sale deed of this house registered in your name then I shall pay back to you this amount of Rs. 5000/- with interest thereon. I shall not put forth any excuse for the same."
11. In the above back drop it is necessary to notice the terms of the agreement Ex. P-1 in order to conclude if time was the essence of the agreement. In the first part of the agreement the provision when translated would read thus:
"The sale deed will be executed before Ahar 5, 2003 (1974). The possession has been delivered to the vendee. The vendee will himself cultivate the land. He will pay 1/3rd batai to the owner in respect of barani land and 1/4th in respect of chahi (irrigated) land till the execution of the sale deed."
A little later it is provided :
"Before execution of the sale deed the vendor shall obtain the sale deed from the Government. In case of some legal hitch in the execution of the sale deed, the sale shall be completed thereafter when permission is granted. After permission the sale will be completed within limitation of three years i.e. 15-8-1976."
A couple of lines later it is provided :
"That the sale in all eventuality shall be completed by 15-8-1976."
Apart from the above the other provisions of the agreement as pleaded and understood by the plaintiff and not denied by the defendant also deserve notice, these are contained in para No. 3(b) and (h) of the plaint, as under:
"3(b). That the defendant was responsible for getting path to the extent of nine marlas from Amar Singh and Ram Chander.
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(h). That it was the bounden duty of the defendant to obtain the sale deed from the Government and in case there was any condition imposed in that sale deed regarding alienation, the defendant was to obtain permission from the Government."
In the written statement apart from other preliminary objections, one objection is:
"Conditions 3(a) to 3(h) of the plaint were conditions precedent for the sale deed to be executed on 15-8-76, the suit is not maintainable and is premature, because the alleged conditions do not exist even now."
12. Learned counsel for the respondent in support of his submission, that the time was the essence of the contract, pointed out that there was no legal obstacle in execution of the sale deed in favour of the plaintiff as the sale deed could be executed even in the absence of the sale deed certificate in favour of the defendant. A definite time was fixed for the sale viz. 15-8-1976. To highlight his submission the learned counsel referred to paras Nos. 3(h) and 15 of the written-statement, application dated 11-12-1981 under Order VII, Rule 11, C.P.C. Reply dated 5-2-1979 to the application under Order XXI, Rule 58, C.P.C. in execution in which the plaintiff paid Rs. 5015/- to save property from sale, para No. 4 of the notice Ex. P-8, affidavit of the plaintiff Ex. P-9 presented before the Sub-Registrar on 16-8-1976, notice dated 16-8-1976 Ex. P-10 issued by the plaintiff and lastly statement of Bhagwan Singh PW, to contend that the plaintiff clearly understood that the sale was to be completed by 15-8-1976, it being the essence of the contract. Reliance for the submission was placed on Gomathinaya-gam Pillai v. Palaniswami Nadar, AIR 1967 SC 868; Ramzan v. Smt. Hussaini, AIR 1990 SC 529; Satya Prakash Goel v. Ram Krishan Mission, AIR 1991 All 343; Sumer Chand v. Hukum Chand, AIR 1965 Madh Pra 177 and Shrikrishna v. Balaji, AIR 1976 Bom 342.
13. Having considered the contentions of the learned counsel for the parties, I feel inclined to agree with the learned counsel for the appellant. Apart from the presumption that in case of sale of immoveable property, the time is not the essence of the contract, the facts of this case lead to the conclusion, that the time was not the essence of the contract. Though, it was argued before the lower appellate Court that time was the essence of the contract yet it was not made part of the pleadings as such. There is no issue. Rather the pleadings of the defendant clearly go to show that the time was not the essence of the contract inasmuch as it was pleaded that the suit was premature and the conditions precedent for the completion of the sale did not exist even on the date of the suit. The conditions precedent for the sale did not exist even on the date of the filing of the suit, the defendant having not obtained the sale certificate/deed from the State Government and having taken no steps to provide a path, as provided in the agreement and pleaded in the. plaint in para 3(b), which was not denied. Clause in the agreement, as reproduced in the earlier part of this judgment assumes importance in the context of the pleadings of the parties in para 3(h) of the plaint and its corresponding reply in the written-statement. The clause regarding legal hitch in the execution of the sale deed as per the agreement and as understood by the parties is highlighted in para 3(h) of the plaint and not disputed in the written-statement. Parties to the agreement were perhaps contemplating that there may be restriction on the right of the defendant to sell the property for some time after the same had been purchased by him in auction from the State Government. Clause regarding 'legal hitch' in the agreement was in that context. If there is clause in the sale certificate issued by the State Government that the purchaser shall not be entitled to further sell the land, say before the expiry of fifteen years then the sale under the agreement could not be completed up to 1981. It is in this context that the plea regarding the suit being premature, was perhaps raised and pleading drafted accordingly. It is undoubtedly true that in same sales effected by the State Government in favour of Harijans, displaced persons and landless persons, there does exist a stipulation by way of restriction, the violation of which entitles the Government to get back the land by cancelling the sale. The sale certificate/deed has not been obtained. If, in the absence of the sale certificate the plaintiff purchases the property and there was restriction in the sale certificate, it would be the plaintiff who would have suffered and not the defendant. It was perhaps keeping this thing in view, that possession of the land wasgiven . to the plaintiff, not in part performance of the agreemenl but as a lessee. Moreover, it was not pleaded by the defendant that the plaintiff was not ready and willing at any time to give effect to the agreement or that the defendant had at any point of time informed the plaintiff to complete the sale on or before the date set or that he had fully complied with the terms and conditions of the sale agreement. In the light of the above and on a harmonious construction of agreement Exhibit P. 1, when . read as a whole, it can be, in my view, safely concluded lhat the time was not the essence of the contract. Thus, the view of the learned appellate court that the time was the essence of the contract cannot, in the circumstances of the case, be Said to be a correct view and the finding of the courts below to that extent is consequently set aside. It is, however, not necessary to go into the question, whether the suit is premature or not, at this stage, for the plaintiff can still be granted the relief of specific performance. It also deserves notice that the defendant did not by serving a notice make the time as the essence of the contract. Reference to various documents made by learned counsel for the defendant, only goes to show that the plaintiff was at all times ready and willing to perform his part of the agreement and he was even ready and willing to do so on the date of the suit. The defendant could only succeed if he had obtained sale deed/ certificate and informed the plaintiff about the same before August 15, 1976 by serving a notice or otherwise and in case there was a restriction on his right to sell, had obtained the necessary permission from the Government prior 10 August 15, 1976. In the absence of this, it could not be successfully-argued that the time was the essence of the contract. For coming to the conclusion that the time was the essence of the contract, the court below has primarily relied heavily on the senlence "that the sale deed shall be executed by 15-8-1976 at all costs.". It was hot profitable to pick up a sentence from the agreement divorced from other parts of the agreement and assign a meaning to it. The entire agreement ought to have been considered in the light of the pleadings for coming to the conclusion. Meaning to a word or a line appearing in the agreement ought to be given in the context in which it is appearing and not by ignoring the other parts of the document.
14. Reliance placed on Section 13(1)(b) of the Specific Relief Act, 1963, by the learned counsel for the respondent again, in my view, lends no support to his contention. The present, as already noticed, is not a case where concurrence of any other person was necessary for validating the title. The present is a case where some sort of restriction was anticipated in the sale certificate yet to be issued by the State Government, namely, some restriction on the part of the purchaser to further sell the properly for specified number of years. Such a condition, if exists, in the sale certificate, the provisions of Section 13(1)(b) of the Specific Relief Act, 1963 would, in my view, not come into play. It was perhaps with this stipulation in view that time for comple-lion of sale was fixed after a lapse often years viz. 1976 of the defendant purchasing the land in 1966, though agreement is of the year 1973.
15. Reliance on Gomathinayagam Piliai's case, (AIR 1975 SC 868) (supra) placed by the learned counsel for the defendant does not help him, raiher as noticed above, goes against him. In Ramzan's case. (AIR 1990 SC 529) (supra), a date was deemed to have been fixed for completion of sale because of a date of redemption which is not the case here al all. The facts of the reported case are entirely different from the fads of the present case.
16. On the point of limitation, learned counsel for the defendant placed reliance on para 23 of the Satya Parkash Goel's case, (AIR 1991 All 343) (supra). In that case, limitation for a suit for specific performance was noticed to be three years front the date fixed for performance of the contract and if no such date is fixed, when the plaintiff had notice that performance had been refused. On reading of Exhibit P. 1, it was held that there was no date fixed for performance of the contract, hence the latter part of the Article 54 of the Limitation Act would apply. In Sumer Chand's case, AIR 1965 Madh Pra 177) (supra), it was held that limitation begins to run from the time fixed for performance of the contract and that where time is fixed for performance, second part of Column III in Article 113 of the Limitation Act would have no application. In Shrikrisbna' case, (AIR 1976 Bom 342) (supra) while considering the question of limitation in a suit for specific performance, it was observed as under (at p. 346) :--
"The starting point of limitation, as already noted, was the date fixed for performance of the contract or, if no such date is fixed, the date on which the plaintiff has notice that performance is refused. In the absence of any indication when attachment would be raised and what would be the date for the performance of the agreement, which was after the attachment was raised, it had to be treated as a case in which no date was fixed for the performance of the contract. To such a case, the starting point of limitation is when the plaintiff has notice that performance is refused. In this instance case, it was when defendant No. 1 sold house No. 384 to defendant No. 2 on 6th February, 1963, under the registered sale deed (Ex. 96) that the plaintiff could be posted with the knowledge that the defendants were refusing performance of the contract. The suit was filed on 22nd May, 1964, that is, well within three years from 6th February, 1963, and would be within limitation."
In my view, none of these judgments helps the counsel for the defendant-respondent. Article 54 of the Limitation Act provides period of limitation to be three years from the date fixed for the performance or, if no such date is fixed when the plaintiff has notice that performance is refused. Thus, the period of limitation is three years of the accrual of cause of action. The cause in this case would have accrued to the plaintiff on the defendant obtaining sale certificate and permission, if any, from the State Government. If this had been done before August 15, 1976 and the plaintiff intimated thereof, it could be safely said that the plaintiff was liable to get the sale deed completed on or before August 15,1976, but that is not so, the defendant having not obtained the sale certificate before, the date fixed and in the absence thereof it could not be ascertained, whether there was a restriction placed on his right to sell the suit property and up to what time and if there was a restriction, he had not obtained permission from the State Government to transfer the property in favour of the third party, the plaintiff in this case. In the situation like this, the sale could be completed after the defendant had ob tained permission and if this had happened, after August 15, 1976 obviously the period of limitation for completion of sale under the agreement would, commence from the date the plaintiff had knowledge of permission having been obtained or that the defendant had a right to transfer the property after the expiry of period of restriction. In the facts of this case, it is clear that the defendant had not obtained sale certificate till today and did not inform the plaintiff that the latter had no legal obstacle in his way to execute the sale deed.
Therefore, in the facts of this case, period of limitation could not be taken to have started with effect from August 15, 1976. The suit filed on July 22, 1981 will have to be held to be within limitation.
17. The contention of the learned counsel for the appellant that the plaintiff got into possession of the property in dispute in part performance of agreement to sell and, therefore, he was protected by the provisions of Section 53-A of the Transfer of Property Act, in the facts of this case, cannot be accepted. True, that the plaintiff had been put in possession on execution of the agreement but not in part performance of the agreement. There is a clear recital in the agreement to sell that possession was delivered to the plaintiff as lessee.
18. Learned counsel for the appellant still raised another contention to the effect that the appellant is entitled to adjustment of a sum of Rs. 5015/- paid by him in the suit titled as "Puran Chand v. Teja Singh" on behalf of the defendant to save a part of the property in dispute being sold in public auction for the recovery of the amount decreed in that suit against the defendant. This contention has been negatived by the courts below by giving cogent reasons and I see no ground to take a view different than the one already taken. Thus, it cannot be held that the plaintiff is entitled to adjustment of this amount against the balance amount of sale consideration,
19. Since a period of more than 15 years has elapsed from the date of purchase of the property by the defendant from the State Government, no useful purpose would be served to hold that the suit is premature. It cannot be accepted that restriction on the part of the defendant to further transfer the property would be for a period longer than this.
20. For what has been discussed above, the findings as recorded by the courts below on the point of limitation and time being the essence of the agreement are set aside. As a result, the suit of the plaintiff for specific performance is decreed. The plaintiff-appellant shall deposit a sum of Rs. 18,500/- being the balance of the sale consideration, with the trial court withinthree months and thereafter he shall be entitled to have the sale deed executed in his favour in accordance with law. Costs of stamps and registration charges etc. in that behalf will be borne by the vendee, the plaintiff in this case, besides the amount of Rs. 18,500/- being the balance of the sale consideration. The amount to be deposited by the plaintiff shall be disbursed to the defendant on execution of the sale deed in favour of the plaintiff by the defendant or any person on latters' behalf in accordance with law. In the peculiar facts of this case, there will be no order as to costs. The present appeal thus, succeeds and is allowed in the aforesaid terms.
21. Appeal allowed.