Andhra HC (Pre-Telangana)
Mandava Lokeswara Rao vs Devineni Vijaya Lakshmi on 13 April, 1999
Equivalent citations: 1999(3)ALD663, 1999(4)ALT49
Author: V. Bhaskara Rao
Bench: V. Bhaskara Rao
ORDER
V. Bhaskara Rao, J
1. This Letters Patent Appeal is directed against the judgment in C.C.C.A.No.183 of 1982 dated 21-3-1995 on the file of ihis Court confirming the judgment and decree passed in OS No.613 of 1980 dated 14-7-1982 on the file of the learned V Additional Judge, City Civil Court, Hyderabad filed for specific performance of the agreement of sale in., respect of 516 Sq. Yards in S.No.127 at Yellareddyguda, Kliairatabad Taluk, Hyderabad District.
2. Defendant is the appellant in this Letters Patent Appeal. The suit in OS No.613 of 1980 on the file of the learned V Additional Judge, City Civil Court, Hyderabad was filed by the plaintiff respondent for specific performance of the agreement of sale in respect of 516 Sq. Yards in Sy.No.127 at Yellareddyguda, Khairatabad Taluk, Hyderabad District after receiving Rs.36,933/-.
3. The plea of the plaintiff was that through her father, the plaintiff agreed to purchase plot No.25 in S,No.l27 belonging to the defendant in an extent of 516 Sq. Yards at the rate of Rs.60/- per sq. yard and an agreement of sale was executed on 7-8-1978, and that the defendant agreed and undertook to obtain the required permission to alienate the suit land in favour of plaintiff and promised to execute the sale deed after obtaining the said permission and a sum of Rs.10,000/-was paid as earnest money on the date of agreement. It was averred that no specific time was fixed for completion of sale transaction but it was agreed in the same agreement that the defendant will be entitled to charge interest at 18% per annum on the balance sale consideration if the sale is not completed after the required permission is obtained as such the time is not the essence of contract. Thereafter, according to the plaintiff, the defendant on 31-10-1978 got issued a legal notice to the plaintiff informing him that he obtained necessary permission and that the plaintiff had to complete the sale transaction within 60 days from the date of grant of permission and further complained that the plaintiff did not co-operate with the defendant in completing the formalities upto 31-10-1978 and required the plaintiff to complete all formalities under the agreement within 15 days from the date of receipt of the said notice, failing which the agreement of sale stands cancelled and advance paid will be forfeited. The plaintiff points out that the contents of the notice were contrary to the agreement.
4. After receipt of the notice issued by the defendant, the husband of the plaintiff met the defendant personally and fixed 31-3-1980 to complete the sale transaction and agreeing to pay interest at the rate of 18% per annum on the balance sale consideration, but, according to the plaint averment, the defendant did not comply with the agreement. Hence the plaintiff got issued a notice to the defendant on 14-4-1980 intimating her readiness to pay the balance consideration together with interest accrued thereon and requesting the defendant to fix a date for sale deed within a week from the date of receipt of the notice, The defendant issued the said notice, but did not fix any date.
5. The defendant contested the suit and filed written statement admitting the execution of the agreement of sale between the parties. It was denied that the time is not the essence of the contract. It was also admitted by the defendant the issue of notice dated 31-10-1978, but the contents of which are not contrary to the sale agreement. According to the defendant the husband of the plaintiff never met the defendant to fix any date for completion of the sale transaction. The notice of the plaintiff. Ex.A3, dated 14-4-1980 was clearly an attempt to circumvent her own default. Inasmuch as the plaintiff did not get the transaction completed within sixty days of obtaining the urban land ceiling permission, nor within 15 days of receipt of defendant's notice, Ex.A2, dated 31-10-1978, the plaintiff committed breach of the contract. The defendant was right in cancelling the sale agreement and forfeiting the earnest money. It is averred that the defendant never agreed to complete the sale transaction by 31 -3-1980. The defendant points out that the alleged stipulation to pay interest would come into play only when the sale transaction could not be completed for any reason within sixty days of obtaining urban ceiling permission. The unreadiness and unwillingness of the plaintiff to pay the balance consideration was not a reason contemplated by the parties nor could it be a valid and proper reason. Since the plaintiff has no means to pay the balance of sale consideration and therefore she has failed to perform her part of the contract even after the defendant's notice, Ex.A2, dated 31-10-1978 within the time stipulated therein.
6. On the basis of the above pleadings, the trial Court framed the following issues:-
1. Whether the plaintiff is entitled for the relief of specific performance of the agreement of sale dated: 7-8-1978 as against the defendant?
2. Whether time is the essence of the contract as pleaded by the defendant?
3. Whether the defendant had authority to cancel the agreement of sale dated: 7-8-1978 by his notice dated: 31-10-'1978?
7. Before the trial Court both parties adduced evidence both oral and documentary. On behalf of the plaintiff, she examined herself as PW1. She also examined K. Venkatadri as PW2 and got marked four documents as Exs.Al to A4. Ex.Al is the agreement of sale dated: 7-8-1978. Ex.A2, dated: 31-10-1978 is the notice issued by the defendant. Ex.A3, dated: 14-4-1980 is the legal notice and Ex.A4 is the postal acknowledgment. On behalf of the defendant he examined himself as DW1 and marked 5 documents as Exs.Bl to B5. Ex.B1 is the letter. Ex.B2 is the diary. Ex.B3 is the entry in Ex.B2. Ex.B4 is the entry in Ex.B2 and Ex.B5 dated 1-9-1978 is the land ceiling permission.
8. After considering the evidence both oral and documentary, the trial Court decreed the suit of the plaintiff.
9. From the conduct of the defendant, When he entered into the witness box, the trial Court found that he is a very very intelligent man well versed with the mundane affairs. Incorporating a term in the said contract that in case the sale deed is not taken by the plaintiff after the defendant got the necessary permission from the urban land ceiling authorities, the plaintiff is liable to pay interest at 18% p,a. "since the date of obtaining the aforesaid permission till the dale of taking the sale deed". The trial Court found that the stipulation of time is not the essence of the contract. The trial Court also found that there is no penal clause nor any forfeiture clause in the said agreement. The trial Court found that both the plaintiff and the defendant are doing hotel business in Hyderabad. The trial Court did not attach much importance to Ex.B1 as it is only a draft. The Court below took into consideration Ex,A2 and A3 and found that time was not the essence of the contract. If time were to be the essence of the contract the defendant would not have wailed. On the other hand, he would have taken steps against the plaintiff. He accepted the evidence of PW1 who met the defendant and sought for time which was granted. Otherwise there is no reason for her to issue a notice. The trial Judge took into consideration the principles of law laid down by the Supreme Court in the case of "Satyanarayana v. Yellogi Rao", , as to the scope of Section 22 of the Specific Relief Act and other decisions and found that there was no delay on the part of the plaintiff in making a request to the defendant to execute the sale deed. The learned trial Judge also took into consideration the conduct of the defendant in issuing Ex.A2 dated: 31-10-1978. Analysing the entire evidence the trial Court found all the points against the defendants.
10. In appeal, viz. CCC A No.183/82, the learned single Judge of this Court considered the entire evidence and findings of the learned trial Judge. Whether time is the essence of the contract, the learned single Judge took into consideration the material portion of the agreement which is extracted herein :-
"I will apply for and obtain the Urban Land Ceiling Permission required for sale and execute the sale deed on proper stamp paper at your expense. I will receive the balance sale consideration as per the measurement of the total area and as per the above agreed rate for per square yard. If any delay is caused in obtaining the registered sale deed it has been agreed that from the date of grant or Urban Land Ceiling permission interest at the rate of 1.50 paise per month for the unpaid balance sale consideration will be paid by the purchaser."
11. The learned single Judge disbelieved the theory putforth by the defendant that the plaintiff was required to pay the remaining sale consideration and obtain sale deed within sixty days from the date of obtaining permission from the land ceiling authorities. Both the learned trial Judge and the learned single Judge disbelieved the veracity of Ex. B1. Since Ex.A1 is silent about the time to perform the contract, the learned single Judge held that it was not available for the defendant to content that the contract was required to be performed within sixty days from the date of obtaining permission from the urban land ceiling authorities. The learned single Judge found that it was not permissible for the defendant to unilaterally prescribe 15 days for completing the contract. The learned single Judge found that the plaintiff tried his best to perform his part of the contract. But it was only the defendant who tried to evade it. According to the learned single Judge, there was no much delay in filing the suit by the plaintiff. Thus observing the learned single Judge dismissed the appeal. Aggrieved by the same the present appeal.
12. Sri Poornaiah, learned Counsel appearing for the appellant contends that the defendant has got issued legal notice Ex.A2, dated: 31-10-1978 to the plaintiff informing about the obtaining of permission on 1-9-1978 from the Urban Land Ceiling Authority, that the transaction should be completed within sixty days from the date of obtaining permission, that, notice, if any should be given in 15 days, that no reply whatsoever was given to Ex.A2 and that therefore the plaintiff was not ready and willing to perform her part of the contract.
13. On the other hand, the learned Counsel appearing for the plaintiff-respondent submits that there is no stipulation in the agreement of sale, Ex.A1 dated: 7-8-1978 that the time is not the essence of the contract, that the plaintiff was always ready and willing to perform her part of the contract and that the defendant-appellant even after obtaining the necessary permission from the Urban Land Ceiling Authority, as stipulated in Ex.A1, has failed to perform his part of the contract. He, therefore, contends that the order of the learned single Judge, confirming the judgment and decree of the trial Court, cannot be interfered with.
14. In support of his contentions, Sri Poornaiah, placed reliance on the decisions of the Supreme Court namely "Smt. Chattel Rani v. Kamal Rani, , "Gamathi Nayagam Pillal v. Palaniswami Nadar, AIR 1967 SC 869, "P.V. Joseph's Son Mathew v. N. Kuruvila's Son", , "Abdul Khader Rowther v. P.K. Sara Bai, , "Kanshi Ram v. Om Prakash Jawal, , "K.S. Vidyanandam v. Vairavan, , Louis Man David and others v. Lois Chinnaya Arogiaswamy and others, 1996 (3) SC JT 499, "Kallatil Sreedharan and another v, Koniath Pandy Prasanna and another", 1996 (8) SC JT.
15. In "Chand Rani v. Kama! Rani", , cited (supra) the Supreme Court held that in respect of agreement of sale of immovable property normally time will not be the essence of the contract unless specifically intended. The Supreme Court further held that granting or refusal of specific performance depends on several factors. The relevant portion is extracted herein:
"In case of sale of immovable property there is no presumption as 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."
16. In "Gomathi Nayagar Pillai v. Palaniswami Nadar cited (supra) the Supreme Court held as follows:-
"The trial Judge apparently confused two independent issues; one of default in performance of the contract by the respondent and the other of readiness and willingness of the respondent to carry out his part of the contract. As observed earlier, time is not of the essence of the contract, default occurs when a party serves a notice making time of the essence and requires the other party within a reasonable time fixed by the notice to carry out the terms of the contract, and the party served with the notice fails to comply with the requisition. In this case no such notice was served, and from the mere delay in calling upon appellants 1 and 2 to complete the contract, default on the part of the respondent cannot be inferred. But the trial Court also came to the conclusion that the conduct of the respondent as evidenced by his statement and his witness proved that he was not ready and willing to perform his part of the contract.
It was further held as follows:-
"The trial Court expressly recorded a finding on issue Nos. adverse to the claim of the respondent. The respondent, had as already observed, claimed that he was ready and willing to perform his part of the contract and appellants 1, 2 and 5 had denied that claim. Before he could be awarded a decree for specific performance, the respondent has to prove his readiness and willingness continuously from the date of the contract till the date of hearing of the suit and if he failed, his suit was liable to fail. And the trial Court dismissed the respondent's suit on that ground also. The High Court could grant a decree or specific performance in favour of the respondent against appellants 1 and 2 only if the Court was satisfied that the respondent was continuously ready and willing to perform his part of the contract from the date of the suit till the date of hearing. But the respondent in the High Court did not apparently challenge the finding of the trial Court on that question against the respondent."
17. In "P.y. Joseph's Son Mathew v. N. Kurvila's Son, cited (supra) while interpreting Section 20 of the Specific Relief Act, the Supreme Court held as follows:-
"Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of operation to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvila could not, get the estate and Mathew was not prepared to part with it. The sheet anchor of the suit by Varghese is the agreement for sale Ex.Al. Since Chettiar had waived his rights thereunder, Verghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance."
18. In "Abdal Khader Rowther v. P.K. Sara Baf cited (supra) the Supreme Court held as follows:-
"The plaintiff-appellant brought a suit for specific performance of a covenant for reconveyance. His plaint did not contain the requisite allegations that he is ready and willing to perform his part of the contract in terms of Forms 47 and 48 which was necessary to obtain a decree for specific performance.
Held, that the equitable remedy recognised by specific relief Act could not be had on the basis of such pleadings and evidence."
19. In "Kanshi Ram v. Om Prakash Jawal" cited (supra), while interpreting the scope of Section 20 and Section 21 of the Specific Relief Act, the Supreme Court held as follows:-
"Having regard to the facts of this case and the arguments addressed by the learned Counsel, the question that arises for consideration is whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles. When the Court gets into equity jurisdiction it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant."
20. In the case of "Lourdu Man David and others v. Louis Chinnaya Arogiaswamy and others" cited (supra), the Supreme Court while interpreting Section 20 of the Specific Relief Act, 1963 held granting or refusing a decree for specific performance is in the discretion of the Court. But the discretion should not be refused arbitrarily Discretion should be exercised on sound principles of law can be of correction by appellant Court. The Supreme Court further held that it is settled law that the party who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands. In other words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief.
21- Likewise in the case of "Kallathil Sreedharan and another v, Komath Pandyla Prasanna and another, cited (supra) the Supreme Court while interpreting the scope of Section 20 of the Specific Relief Act held that the Court is given discretion and as such the discretion has to be exercised not arbitrarily but on sound and reasonable basis guided by judicial principles.
22. In the case of "K.S. Vidyanandam v. Vairavan, cited (supra) (he Supreme Court held as follows:-
"It cannot be said that any and every suit for specific performance of the agreement (which does not provide specifically that time is of the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one of the other party. That would amount to saying that the time limits prescribed by the parties to the agreement have no significance or value and that the mean nothing......
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 the modified particularly in the case of urban immovable properties. It is high time, the Court do so. In the instant case may be, the parties knew of the circumstance regarding rising prices but they have also specified six months, as the period within which the transaction should be completed. The said time limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent? All this only means that while exercising its discretion, the Court should also bear in mind that when the parties prescribe certain time limit(s) for taking steps by one or the other party, it must have some significance and that the said time limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to immovable properties). (Para 11) In the instance case from the date of agreement to sale till the date of suit notice the purchaser was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the vendors to execute the sale deed and deliver possession of the properly. Further the delay was complied with substantial rise in prices... according to the vendors three times -- between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the purchaser."
23. Sri Poornaiah, learned senior Counsel appearing for the appellant further contends that the power of the Bench under Section 15 of the Letters Patent Act is not limited to interfere with the orders passed by the appellate Court. To support his contention he placed reliance on the decision of the Supreme Court in the case of "Baddula Lakshwaiah v. Sri Anjaneyaswami Temple", , wherein the Supreme Court held as follows:-
"It is the internal working of the High Court which splits it into different Benches and yet the Court remains one. A Letters Patent Appeal, as permitted under the Letters Patent, is normally an intra- Court appeal whereunder the Letters Patent Bench, sitting as a Court of Correction, corrects its own orders in exercise of the same jurisdiction as was vested in the single Bench. Such is not an appeal against an order of a subordinate Court. In such appellate jurisdiction the High Court exercises the powers of a Court of Error. So understood, the appellate power under the Letters Patent is quite distinct, in, contrast to what is ordinarily understood in procedural language. That apart the construction of the afore-mentioned two documents involved, in the very nature of their import, a mixed question of law and fact, well within the powers of the Letters Patent Bench to decide. The Bench was not powerless in that regard."
24. If we test the findings given by the trial Court and also the learned single) Judge of this Court on the evidence made available it is difficult to say that the judgment under challenge is bad and arbitrary. If time were to be the essence of the contract j there would not have been a recital that in I case the plaintiff fails to get the sale deed registered even after defendant obtaining urban land ceiling certificate he must pay interest for the balance amount at the rate of 18% p.a. The allegation made by the defendant that the plaintiff was never ready and willing to perform his part of the contract namely to pay the balance sale consideration and get the sale deed registered is quite incorrect. When no time is fixed, it is incorrect to contend that the plaintiff is not entitled to get the sale deed registered on the allegation that he did not fulfil the same within the time granted. The notice dated 31-10-1978 runs contrary to the contents of Ex.A1. The notice was issued only to make the plaintiff to agree to the terms of the defendant. Since the parties are close relatives and a statement has been made by the plaintiff that she went to the defendant and requested for some time to execute sale deed, it is possible to believe that the plaintiff requested the defendant for grant of some time which was granted by the defendant. Specific relief sought in this case cannot be refused as the defendant never complained that the plaintiff was not paying interest on the sale consideration. Sri Poornaiah, learned senior Counsel appearing for the appellant placed reliance on some of the authorities in support of his contentions, which were referred earlier. On facts they are not applicable to the case on hand. It is not the case of the plaintiff that during the period in question there was rise in prices of immovable properties to hold that taking advantage of rise in prices the plaintiff has come with the present suit for specific performance. On the other hand, the plaintiff filed the suit for specific performance within three years as required under Section 54 of the Act. The defendant failed to establish that the plaintiff took undue advantage or made use of defendant's lielpless position to get the sale deed executed. Since the transaction in question is in respect of immovable property even if it is assumed that time was fixed for performance of the contract but attendant circumstances and the conduct of the parties did not suggest that time is the essence of the contract. The learned trial Judge and the learned single Judge used their discretion for granting relief of specific performance of the contract and the said discretion was based on proper exercise of sound principles. Further both trial Court and the Appellate Court before granting relief of specific performance were guided by justice, equity, good conscience and fairness to both parties. Apart from this it was not established by the defendant that during the period between Ex.A1 and the date of filing of the suit there was rise in prices in respect of immovable properties like the plaint schedule property which made the plaintiff to avail of this opportunity.
25. Sri Poornaiah, learned senior Counsel appearing for the appellant-defendant laid stress on the scope of Clause 15 of the Letters Patent Act thinking that we cannot interfere with the findings of the learned single Judge and the trial Court. We are aware of the scope of Clause 15 of the Act. The same is in the nature of intra Court appeal. Letters Patent Bench sitting as Court of Correction corrects its own orders in exercise of the same jurisdiction as was vested in the single Bench.
26. In our view the conduct of the defendant resisting to execute the sale deed is quite incorrect. Having reached the conclusion that the judgments of the trial Court and the learned single Judge are the result of proper appreciation of evidence, we find no illegality or arbitrariness in the said judgments. The conclusions reached by the trial Court and the learned single Judge are correct and as such no interference in this Letters Patent Appeal is warranted. Thus, there is no merit In anyone of the contentions raised by Sri Poornaiah, learned senior Counsel appearing for the appellant.
27. Accordingly, the L.P.A. is dismissed. No costs.