Madras High Court
Shanmugam vs M.Velappan on 29 March, 2012
Author: G.Rajasuria
Bench: G.Rajasuria
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.03.2012 C O R A M THE HONOURABLE MR.JUSTICE G.RAJASURIA A.S.No.738 of 2010 and M.P.No.1 of 2010 1. Shanmugam 2. Palaniammal 3. Pappayee .. Appellants vs. M.Velappan .. Respondent Appeal filed as against the judgment and decree dated 15.03.2010 passed by the learned Additional District Judge (Fast Track Court), Namakkal in O.S.No.19 of 2005. For Appellant : Miss.P.T.Asha for M/s.Sarvabhauman Associates For respondent : Mr.S.V.Jayaraman Senior counsel for Mrs.R.Jaanaki JUDGMENT
This appeal is focussed by the defendants as against the judgment and decree dated 15.03.2010 passed by the learned Additional District Judge (Fast Track Court), Namakkal in O.S.No.19 of 2005, which was filed by the plaintiff seeking specific performance of an agreement to sell.
2. The parties, for convenience sake, are referred to here under according to their litigative status and ranking before the trial Court.
3. The epitome and the long and short of the relevant facts, which are absolutely necessary and germane for the disposal of this appeal would run thus:
a] The plaintiff filed the suit seeking specific performance of the agreement to sell dated 13.10.2004 with the following averments:
On 13.10.2004, there emerged an agreement to sell between the plaintiff and the defendants, whereby the latter agreed to sell in favour of the former, the suit property for a total sale consideration of Rs.7,30,500/- and under which, a sum of Rs.1,00,000/- was paid by the plaintiff to the defendants towards advance. The period of performance contemplated therein was five months. Even before the expiry of the said period, notice was sent by the plaintiff expressing his readiness and willingness to perform his part of the contract; for nothing but to get a reply from the defendants contending as though Ex.A2 was not intended to be acted upon and only in contemplation of an intended loan, the said agreement to sell emerged; whereupon the plaintiff filed the suit.
b] Inveighing and challenging, refuting and disputing the allegations/averments in the plaint, the defendants filed the written statement, which could succinctly and pithily be stated thus:
The defendants intended to borrow a sum of Rs.1,00,000/- from the plaintiff, who is the money lender and he imposed condition to the effect that the defendants should execute the agreement to sell in respect of the suit properties in his favour by way of security for securing the prompt repayment of the said loan. He also insisted that two pro-note formats also should be signed by the defendants in that connection. In fact, the sum of Rs.One lakh was given by plaintiff to Palanisamy only and the defendants did not receive it at all. The defendants reposing confidence in one Palanisamy executed the suit agreement to sell and also signed two pro-note formats and handed over them to Palanisamy with the understanding that the Palanisamy should not hand over those documents to the plaintiff before the defendants take a decision to agree for such arrangement and receive the loan. However, the said Palanisamy betrayed the confidence reposed on him and handed over those documents to the plaintiff, whereby, the plaintiff did choose to file this vexatious suit.
Accordingly, the defendants prayed for the dismissal of the suit.
c] The plaintiff filed the reply statement refuting the contentions of the defendants.
d] The trial court framed the relevant issues.
e] During trial, the plaintiff examined himself as P.W.1 along with P.Ws.2 to 5 and marked Exs.A1 to A17. On the defendants' side, D2 examined herself as DW1 along with D.W.2 and Exs.B1 to B9 were marked and the witness's document Ex.X1 was also marked.
f] Ultimately, the trial court decreed the suit as prayed for.
4. Being aggrieved by and dissatisfied with the judgment and decree of the trial court, the defendants have preferred this appeal on various grounds.
5. The learned counsel for the appellants/defendants placing reliance on the grounds of appeal, would put forth and set forth her arguments, the gist and kernel of the same would run thus:
(i) The trial court without analysing as to whether the plaintiff was ready and willing to perform his part of the contract, simply decreed the suit.
(ii) The depositions of P.Ws. 1 to 3 are militating as against one another, which the trial court failed to take note of.
(iii) The trial court over looked Ex.B2 and the oral evidence of PW1 regarding the earlier suit in O.S.No.363 of 2007 on the file of the learned District Munsif, Namakkal filed by the appellants/defendants herein.
(iv) The plaint is bad for suppression of material facts.
(v) The evidence on record would display and demonstrate that the suit property is worth Rs.1 lakh per acre, whereas the entire extent of suit properties measuring an extent of 15.54 acres was allegedly agreed to be sold for a paltry sum of Rs.7,30,500/- as per Ex.A2.
Accordingly, the defendants prayed for setting aside the judgment and decree of the trial court and for dismissing the original suit.
6. In a bid to make mincemeat of and torpedo the contentions put forth on the side of the appellants/defendants, the learned senior counsel for the respondent/plaintiff would advance his arguments, the pith and marrow of the same would run thus:
(a) The very plea of the defendants is a far-fetched one. No one would ever execute an agreement to sell and also sign two blank pro notes and hand over the same to a third party, viz., Palanisamy for safe custody and that too, without receiving any amount, because the alleged lender of money, viz., the plaintiff insisted for such a condition.
(b) The plea of the defendants is too big a pill to swallow by anyone. The trial court correctly disbelieved such version and decreed the suit, warranting no interference in the appeal.
(c) The defendants candidly and categorically admitted in their evidence that Ex.A2 was written and on such written document alone, all the three defendants put their left thumb impressions and this is indicative of the fact that they agreed for such a course; in such a case, the execution of the agreement by them was beyond doubt.
(d) There is nothing to indicate as to what action the defendants took as against the said Palanisamy. Had really anything happened as narrated by defendants, certainly, the defendants would not have kept quiet and by this time, they would have taken both civil and criminal action as against Palanisamy; but they did not do so till date.
Accordingly, the learned senior counsel prayed for the dismissal of the appeal.
7. The points for consideration are as under:
1. Whether the trial court was justified in not accepting the plea of the defendants in the wake of the evidence adduced on the side of the defendants vis-a-vis the evidence adduced on the side of the plaintiff?
2. Whether the trial court did not take into consideration before decreeing specific performance, the readiness and willingness on the part of the plaintiff in performing his part of the contract and if so, what consequences will follow?
3. Whether the suit property was under-valued in Ex.A2 and if so, whether, that would lead to the inference that Ex.A2 was the one not intended to be acted upon, but emerged only for security purpose?
4. Whether there is any perversity or illegality in the judgment and decree of the trial court?
8. All these points are taken together for discussion as they are inter-linked and inter-woven, inter-connected and entwined with one another.
9. The whole kit and caboodle of facts and figures as stood exposited from the records could pithily and precisely be set out thus:
Ex.A2 the agreement to sell dated 13.10.2004 emerged between the plaintiff and the defendants, whereby the latter agreed to sell in favour of the former the suit property for a total sale consideration of Rs.7,30,500/-, subject to a clause to the effect that if there is variation in the extent of 15 acres 54 cents as found specified in the agreement, then the sale consideration should be calculated at the rate of Rs.500/- per cent. A sum of Rs.1,00,000/- was paid under the said agreement by the plaintiff in favour of the defendants as advance. The period of performance contemplated in it was five months. Even before the expiry of the said period, notice was issued by the plaintiff to the defendants, for nothing but to get a reply from the defendants that the said agreement Ex.A2, was not reflecting the true state of affairs and it was only a security for the alleged loan transaction. Hence, the plaintiff filed the suit seeking the specific performance of an agreement to sell.
10. On the other hand, the defendants would contend that Ex.A2 is not at all to be treated as an agreement to sell and it emerged only by way of security as set out supra; the contention on the side of the plaintiff that a sum of Rs.1,00,000/- was paid as advance as contemplated in Ex.A2 was false and it was not received by them from the plaintiff, but he paid that sum to the mediator/panchayatar namely, Palanisamy, whereupon Ex.A2 along with two signed pro-note- formats, was given to Palanisamy and it was Palanisamy who betrayed the defendants and handed over those documents to the plaintiff so as to enable him to file the suit.
11. Indubitably and indisputably, the defendants have not raised their accusative finger as against Palanisamy and no legal action also has been taken as against him. The trial Court in its judgment correctly applied the principle of common sense and analysed the plea of the defendants. The defendants who were admittedly in need of loan, would not have kept quiet without contacting Palanisamy within a few days, but they would have ascertained the position, because it was the specific case of the defendants that they did not take a decision as on the date of emergence of Ex.A2 about the acceptance of loan subject to such onerous conditions imposed by the plaintiff. As per the defendants, as an interim arrangement alone, the plaintiff handed over the sum of Rs.1,00,000/- to Palanisamy and in turn, the defendants were made to hand over Ex.A2 along with the said signed pro-note formats to Palanisamy for the purpose of informing Palanisamy about their final decision as to whether they should enter into such loan transaction subject to such conditions as suggested by the plaintiff or not. If that be so, needless to say that, certainly within a week or so, the defendants should have approached Palanisamy and expressed their desire not to proceed further with such onerous loan transaction and they should have also taken steps to get back Ex.A2 as well as the said two promissory notes. No one knows as to what happened to those two signed pro-notes/formats and there is no explanation also in that regard. The said Palanisamy was not examined. However, the learned counsel for the defendants would try to explain and expound that steps were taken to examine Palanisamy on commission. But the Commissioner returned the warrant to Court by stating that the said Palanisamy was as deaf as an adar and he could not hear anything. Whereupon, further steps were not been taken to examine Palanisamy with the help of any expert in that regard. As such, the conduct of the defendants in allowing matters to remain as such, bespeaks against them and the trial Court took that into consideration and disbelieved the plea of the defendants.
12. Whereas, the learned counsel for the defendants would submit that the original documents relating to the suit property were not handed over to the plaintiff by them, but the plaintiff surprisingly produced those documents before the Court. According to the defendants, those documents were handed over to Palanisamy only, but there is no reference to it in the written statement.
13. The learned counsel for the defendants would vehemently argue that primarily and importantly the conduct of the plaintiff should be taken into consideration in a suit for specific performance. In this regard, she cited the following decisions:
(i) 2008 (1) CTC 86 [SC] [Sitaram and others vs. Radhey Shyam]
(ii) 2008(4) CTC 494-Division Bench judgment of this court [ Fathima Majeed vs. Subhapratha Ravikumar]
(iii) (2008) 3 MLJ 796 of this court [ P.Sampoornam and others vs. L.T.Somasundaram and others] Absolutely there is no quarrel over the proposition as found exemplified in those precedents.
14. The learned Senior Counsel for the plaintiff citing the decision of the Hon'ble Apex Court reported in 2008(11) SCC 45 [Silvey and others vs. Arun Varghese and another]; certain excerpts from it would run thus:
7. It is submitted that there must be material to show about the readiness and willingness throughout, even though a person may have funds or is capable of raising funds. These aspects have been lost sight of by the High Court.
8. Learned Counsel for the respondents on the other hand submitted that though in a given case even in respect of an agreement for sale of immovable property, time may be the essence of agreement yet it would depend upon several factors. If the circumstances show that the time was the essence of the agreement that fact can also be taken note of. In the instant case, it is submitted that the defendants themselves have accepted that the time was extended and the agreement was to be given effect to before monsoon set in. But the period extended itself to a period which was admittedly after monsoon had set in. A false plea was taken by the defendants about the plaintiffs having told them to have abandoned the agreement. This conduct itself disentitled the defend ants from opposing the suit for specific performance of contract.
11. As rightly noted by the High Court, the plaintiffs have pleaded in terms of Section 16C of the Specific Relief Act, 1963 (in short the 'Act') that they have always been and are ready and willing to perform their part of the contract. Plaintiff No. 2 as PW 1 has also spoken about this fact. The case of the plaintiffs was that the defendants were not ready with the document as contemplated in Clause 2 of Exh. A1 which resulted in the delay in the performance of the contract and in the plaintiffs seeking the performance of the contract by the defendants.
14. As regards the false plea of the defendants, the effect needs to be noted. It was pleaded that defendant No. 3 had gone to the house of plaintiff No. 2 in Alleppey prior to the receiving any letter from the plaintiffs and had spoken that they had told him that they were not keen in enforcing the application under Exh.A1. But when examined as DW1, the said defendant No. 3 admitted that he had never met the plaintiff as pleaded in the written statement and that he or any other defendant had never gone to Alleppey to meet plaintiff No. 2 at his residence to speak about the performance of the contract. The plea stated in the written statement was abandoned in evidence. In Lourdu Mari David and Ors. v. Louis Chinnaya Arogiaswamy and Ors. , it was noted that the conduct of the defendant cannot be ignored while weighing the question of exercise of discretion for decreeing or denying a decree for specific performance. The High Court has, after analyzing the factual position, come to the conclusion that the defendants were really not ready to perform their obligation in terms of the contract and had taken a false plea in the written statement.
would develop his argument that in a suit for specific performance it is not only the conduct of the plaintiff that should be taken note of, but also the conduct of the defendants. According to him, the defendants glaringly took a false plea as though the suit transaction was a loan transaction and thereby they exposed their conduct and in fact it amounts to 'Pot calling the kettle black' and their plea cannot be considered at all.
15. However, the learned counsel for the defendants would submit by placing reliance on Ex.B1 dated 27.06.2007 the counter filed by the plaintiff in I.A.No.558 of 2007 in O.S.No.363 of 2007, Ex.B2 the written statement filed by the plaintiff and Ex.B5 the certified copy of the deposition of the plaintiff in O.S.No.363 of 2007 that the defendants filed those documents before the District Munsif Court pending this suit for specific performance, so as to protect their possession, as the plaintiff herein attempted to trespass into the suit property and take forceful possession of it and in that the plaintiff herein came forward with the false pleas, which were negatived by the Court and injunction was granted in favour of the appellants/defendants herein. Such conduct on the part of the plaintiff herein would disentitle him to obtain specific performance.
16. Whereas the learned Senior Counsel for the respondent/plaintiff would object to such plea being taken before this Court, in view of the fact that no specific stand in that regard was set out in the grounds of appeal; even before the trial Court, such plea was not obviously taken and in such a case, it would not be open for the defendants to try to non-suit the plaintiff by pleading that he took false pleas as defendant in the injunction suit O.S.No.363 of 2007 filed by the defendants herein.
17. I perused Ex.B7 the judgment passed by the District Munsif Court in O.S.No.363 of 2007 and found that there is no specific finding to the effect that the plea of the defendant therein, who is the plaintiff herein, was mendacious or false. No doubt the plaintiff could not prove his plea in the injunction suit that subsequent to the emergence of the agreement to sell, the suit property was handed over to him in the presence of Panchayatars by the defendants. Simply because he could not prove his plea of possession, that it does not mean that he should be labelled or dubbed as a person bent upon stooping down to the level of uttering out mendacious and false statements/pleas. No doubt, the plaintiff's (P.W.1) deposition in this suit during cross examination was antithetical to Ex.B5, his affidavit in the said injunction suit O.S.No.363 of 2007.
18. The core question arises as to whether such a plea on the part of the plaintiff during cross examination disowning the receipt of copy of Muchalika relating to possession can alone be taken as sufficient to non suit him, if he is otherwise entitled to specific performance.
19. The learned Senior Counsel for the plaintiff would convincingly argue that without proper pleadings on the part of the defendants but merely putting question during cross examination of PW1 and getting answer from him would not non-suit him. As per Ex.B5 in the previous suit, P.W.1 herein, contended that there was a Panchayat in the presence of one Natesan who was not examined at all before this Court and there emerged a Muchalika and a copy of it was given to both sides. The fact remains that the said Muchalika was not produced by him. However, here he would disown such a statement as contained in Ex.B5. The trial Court also in O.S.No.363 of 2007 while concluding its judgment simply referred to the specific performance suit and opined that the ultimate rights of the parties would get adjudged while disposing of the specific performance suit. However, the plaintiff herein who is the defendant therein candidly and categorically stated that even though possession was handed over by the defendants herein to the plaintiff, he could not cultivate the land and it was lying fallow only. In fact, the sum and substance of the contention in the previous suit was that even though before Natesan certain compromise emerged relating to possession yet that was not implemented and the said fact one could understand from Ex.B7 dated 10.07.2009, the judgment of the District Munsif Court in O.S.No.363 of 2007.
20. As such, I am of the considered view that there is no conscious mendacity or falsity on the part of the plaintiff in resisting the earlier suit. In fact, he made a supine submission there to the effect that he was not in effective possession by cultivating the suit property. Thereupon only the court granted injunction as against the plaintiff herein.
21. The learned counsel for the defendants would contend that the deposition of DW2 one of the attesting witness to Ex.A2 would support the case of the defendants. Whereas the learned senior counsel for the plaintiff would point out that the deposition of DW2 in no way could be taken as one supporting the plea of the defendants because she pleaded ignorance about the actual transaction. But, by and large, from the reading of the deposition of DW2, the court could understand that DW2 supported the plea of DW1; but that deposition should be taken with a pinch of salt for the reason that DW2 would candidly without minching words state that he could not say as to what made the plaintiff to give a sum of Rs.1,00,000/- to Palanisamy instead of paying that sum to the defendants.
22. In my discussion supra, I adverted to the far fetched elements involved in the plea of the defendants and as to how the conduct of the defendants boomeranged as against themselves.
23. The learned counsel for the defendants would advance her arguments to the effect that Ex.A2 is ex facie and prima facie a namke vaste document, not intended to be acted upon, because the real happening on the date of Ex.A2 was only relating to a proposed loan transaction and in view of the same only, the total sale consideration was mentioned as Rs.7,30,500/- instead of Rs.7,74,000/- as calculated and opined by the scribe viz., PW2 himself.
24. The learned senior counsel for the plaintiff would try to explain and expound by pointing out that tentatively that sum of Rs.7,30,500/- was fixed subject to actual measurement of the suit property and calculation of the sale price at the rate of Rs.500/- per cent and according to him, his client is ready to pay at the rate of Rs.500/- per cent for the extent of 15.54 acres, whether it is actually on a ground or not.
25. I would like to recollect and call up the maxim - id certum est quod certum reddi potest That is certain which can be made certain.
26. Here simply because, in the last portion of Ex.A2 there is reference to calculation of sale price at the rate of Rs.500/- per cent, that it does not mean that there is some uncertainity about the agreement itself and it is quite obvious because depending upon the real extent on measurement, the parties agreed to vary the sale price proportionately, which cannot be labelled or dubbed as one suffers from voidity or vagueness.
27. The plaintiff, without taking precaution to measure the suit property expressed his readiness to go for sale; in such a case, he should be ready to pay for the extent of 15.54 acres at the rate of Rs.500/- per cent and accordingly, if it is worked out, it comes to Rs.7,77,000/- (Rupees seven lakhs seventy seven thousand only). I am of the considered view, that the trial court while decreeing specific performance should have ordered that the plaintiff should be ready to deposit the sum of Rs.7,77,000/-; after deducting the sum of Rs.1,00,000/-, which was paid under Ex.A1. As such, the amount to be deposited would come to Rs.6,77,000/- (Rupees six lakhs and seventy seven thousand only).
IN RE READINESS AND WILLINGNESS TO PERFORM THE PLAINTIFF'S PART OF THE CONTRACT:
28. The learned counsel for the defendants would argue that the trial court did not take into consideration the readiness and willingness on the part of the plaintiff in performing his part of the contract and there was also no issue framed to that effect, for which, the learned senior counsel for the plaintiff would argue that since there was no such plea taken in the written statement, no issue was framed and consequently the concentration before the trial court was only relating to the genuineness of Ex.A2, the agreement to sell.
29. Be that as it may, at this juncture, I harp back to the decision of the Hon'ble Apex Court reported in (2011) 1 SUPREME COURT CASES 429 J.P.BUILDERS AND ANOTHER V. A.RAMADAS RAO AND ANOTHER and certain excerpts from it would run thus:
"27. It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that the 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."
Even in an exparte matter, the court is enjoined to analyse as to whether the plaintiff has been ready and willing to perform his part of the contract throughout.
30. The learned senior counsel for the plaintiff would at this juncture, put forth his argument to the effect that this court, being the last court of fact could very well from the available evidence give a finding that the plaintiff was always ready and willing to perform his part of the contract because, the circumstances reveal so. Whereas the learned counsel for the defendants, would submit that this court even though happened to be the appellate court cannot decide on a point, which was not decided by the trial court.
31. I fumigate my mind with Order XIV Rule 1 of the Code of Civil Procedure, as per which, issues could be framed by the court if at all, there is assertion by the plaintiff and denial by the defendant in respect of a material fact.
32. But, in this case, indubitably and indisputably, the defendants in the written statement did not take any such plea relating to readiness and willingness, as has been observed by me supra. In view of the Hon'ble Apex Court's mandate that the court itself should suo motu from the available evidence analyse and arrive at a conclusion as to whether there was readiness and willingness on the part of the plaintiff throughout from the date of emergence of the agreement to sell, to perform his part of the contract. But that was not done so, because the concentration of the trial court was mainly in finding out as to the genuineness of Ex.A2 the agreement to sell.
33. No doubt, the trial court, correctly after taking into consideration the pros and cons of the matter gave a finding that Ex.A2 happened to be a genuine agreement to sell. In such a case, this court, being the last court of fact, can very well from the available evidence, instead of remanding the matter back to the trial court, can give a finding on that issue here itself because, in my considered opinion, there is ample evidence to that effect.
34. Whereupon, the learned counsel for the defendants would vehemently argue that in Ex.A2 itself, there is a candid and categoric admission on the part of the plaintiff that he was not having the financial wherewithal at that point of time to pay the entire sale consideration and he required five months' time and in such a case, he ought to have produced some evidence to prove that he acquired that much amount as contemplated in Ex.A2 to perform his part of the contract.
35. The decision of the Hon'ble Apex Court reported in (1997) 4 SCC 482 [Bibi Jaibunisha vs. Jagdish Pandit] could fruitfully be cited regarding financial wherewithal and certain excerpts from the said decision would run thus:
The next question is : whether the appellant was ready and willing to perform his part of the contract? In that behalf, all the Courts have found that the appellants was not ready and willing to perform his part of the contract and an inference has been drawn in support of the finding from the non-production of the Bank Pass-book. It is seen that though he has not produced the passbook, it is not the plea of the respondent that she had no capacity to pay the amount. She established that she has a substantial money to pay the amount. Under these circumstances, it would be unlikely that the appellant would have failed to offer the amount before coming to the Court for the specific performance. It is seen that the last day of the limitation under the contract was February 20, 1973 and the suit was filed on April 7, 1975 within three years under Article 54 of the Schedule to the limitation Act. The courts below were wrong in coming to the conclusion that the appellant had not tendered the amount to the respondent. It is seen that in the evidence of the plaintiff (PW-1), it is stated that he was willing and, in fact, he had offered a sum of Rs. 4,500/-. On the other hand, another witness (PW-3) has stated that he has offered to pay a sum of Rs. 4,000/-. On this minor discrepancy of Rs. 500/-, the court below was not right in disbelieving the entire evidence. The material question is: whether the appellant had capacity to pay the money as offered. On this aspect, there is no consideration by either of the courts. Under these circumstances, the courts below were in error in reaching the conclusion that the appellant was not ready and willing to perform her part of the contract. As held earlier, there is no dispute on the capacity of the appellant to pay back Rs. 4,000/- the consideration paid under the conveyance executed in favour of the respondent. When we put the question to the learned counsel for the appellant as to what amount his client is willing to pay since the property is required to be reconveyed under the agreement, the learned counsel, in fairness, has stated the appellant is willing to pay a sum of Rs. 40,000/- in lump sum. We think that the offer is very fair. ........."
A mere perusal of the aforesaid decision would unambiguously and unequivocally highlight the fact that the plaintiff need not actually produce any pass-book or Fixed Deposit receipts standing in his name to prove his financial ability and it would be sufficient if it is established that he is man of means capable of raising sufficient funds to pay the sale consideration.
36. Here, as correctly pointed out by the learned senior counsel for the plaintiff, within the expiry of five months period, the plaintiff sent notice as per Ex.A3 dated 19.02.2005 expressing his readiness and willingness to perform his part of the contract. Had in the reply notice, the defendants expressed their readiness to execute the sale deed and even then, if there had been hesitation on the part of the plaintiff, then that would have become fatal to his prayer for specific performance. But, in this case, the response from the defendants was totally different. It would be preposterous and too much to assume or presume that the plaintiff issued notice within the stipulated period of five months, without even having money, foreseeing that the defendants would deny the execution of Ex.A2.
37. The learned senior counsel for the plaintiff, appropriately and appositely, legally and convincingly would put forth and set forth one other argument, which deserves commendation. He would submit that admittedly, the defendants approached the plaintiff, because he happened to be the money lender; when such is the indubitable factual position, it would not be open for the defendants to question the financial wherewithal of the plaintiff. I would like to readily agree with such an argument, because it is the case of the defendants themselves that the plaintiff happened to be a money lender. It is anybody's guess that a money lender during the year 2005 can raise a sum of Rs.seven lakhs and odd and even by phantasmagorical thoughts, it cannot be visualized that a money lender would not be able to raise that much amount as contemplated in Ex.A2 to perform his part of the contract.
38. The learned counsel for the defendants would also submit that the sale price contemplated in Ex.A2 was next to nothing price and the plaintiff wanted to snatch away the property for a song, from the defendants, who are illiterates and in that connection, she relied upon Ex.B4, which is the certified copy of the sale deed dated 8.6.1998.
39. Placing reliance on Ex.B4 the learned counsel for the defendants would submit that the very adjacent land to the suit property measuring an extent of 1 acre and 8 cents was sold during the year 1998 as per Ex.B4 for a sum of Rs.1,00,000/- and it is quite obvious and axiomatic that the value of the suit property would have been much more during the year 2004, so to say, the year in which the Ex.A2 the agreement to sell emerged. Shockingly, in Ex.A2, the extent of 15.54 acres was allegedly agreed to be sold only for a meagre sum of Rs.7,30,500/-. She would also stress upon the fact that her attempt to highlight the meagreness of the sale price was for the purpose of pointing out that Ex.A2 was not a document intended to be acted upon.
40. The learned senior counsel for the plaintiff would point out that the defendants candidly and categorically in the written statement as well as through D2 as DW1 admitted that in their presence only, Ex.A2 the document was written even though there was no consensus relating to the fact, as to who actually scribed it.
41. The learned counsel for the defendants would try to explain and expound by pointing out that the defendants are all illiterates and so they were not in a position to understand the recitals in Ex.A2 and object to the same. They reposed confidence in Palanisamy at the relevant time and in his presence alone Ex.A2 was scribed. In such a case, the plea of the defendants that they were not aware of the sale price as found specified in Ex.A2 is a far fetched one, which deserves to be rejected.
42. Whereas in order to probabilise the case of the plaintiff, the learned senior counsel would place reliance on Ex.A7 the other sale deed as well as the deposition of PW4 and Ex.X1 and submit that the aforesaid evidence would clearly display and demonstrate that the suit property was properly valued and Ex.B4 being, one swallow does not make a summer and the defendants cannot find fault with the sale price arrived at between the parties, while scribing Ex.A2. Even as on the date of the emergence of Ex.A2, the guideline value was only Rs.15,500/- per acre and not Rs.1,00,000/-.
43. I harp back to Explanation-1 of Sub-section (2) of Section 20 of the Specific Relief Act. In this regard, the following decisions of the Hon'ble Apex Court could fruitfully be recollected and certain excerpts from those decisions would run thus:
(i) (1997) 3 SCC 1 [ K.S.Vidyanadam and others vs. Vairavan]
10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow 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 or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani1: (SCC p. 528, para 25) ... it is clear that 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 (evident?): (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. In other words, the court should look at all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades particularly after 1973*. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15-6-1979. The suit notice was issued by the plaintiff only on 11-7-1981, i.e., more than two years after the expiry of six months' period. The question is what was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The trial court has accepted the defendants' story whereas the High Court has accepted the plaintiff's story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agreement. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months, the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single letter or notice from the plaintiff to the defendants calling upon them to get the tenant vacated and get the sale deed executed until he issued the suit notice on 11-7-1981. It is not the plaintiff's case that within six months', he purchased the stamp papers and offered to pay the balance consideration. The defendants' case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows that the story put forward by him is false.
The tenant has been examined by the defendant as DW 2. He stated that soon after the agreement, he was searching for a house but could not secure one. Meanwhile (i.e., on the expiry of six months from the date of agreement), he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not vacate. It is equally an admitted fact that between 15-12-1978 and 11-7-1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2 1/2 years, the prices went up three times and that only because of the said circumstance has the plaintiff (who had earlier abandoned any idea of going forward with the purchase of the suit property) turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by Defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2 1/2 years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15-12-1978 till 11-7-1981, i.e., for a period of more than 2 1/2 years, the plaintiff 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 defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendants' case that the values of the house property in Madurai town were rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and demand specific performance.
11. Shri Sivasubramaniam cited the decision of the Madras High Court in S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar2 holding that mere rise in prices is no ground for denying the specific performance. With great respect, we are unable to agree if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the court by law. We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties fuelled by large-scale migration of people from rural areas to urban centres and by inflation. Take this very case. The plaintiff had agreed to pay the balance consideration, purchase the stamp papers and ask for the execution of sale deed and delivery of possession within six months. He did nothing of the sort. The agreement expressly provides that if the plaintiff fails in performing his part of the contract, the defendants are entitled to forfeit the earnest money of Rs 5000 and that if the defendants fail to perform their part of the contract, they are liable to pay double the said amount. Except paying the small amount of Rs 5000 (as against the total consideration of Rs 60,000) the plaintiff did nothing until he issued the suit notice 2 1/2 years after the agreement. Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties evolved in times when prices and values were stable and inflation was unknown requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so. The learned counsel for the plaintiff says that when the parties entered into the contract, they knew that prices are rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstance 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).
13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 years in clear violation of the terms of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices according to the defendants, 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 plaintiff.
14. Shri Sivasubramaniam then relied upon the decision in Jiwan Lal (Dr) v. Brij Mohan Mehra4 to show that the delay of two years is not a ground to deny specific performance. But a perusal of the judgment shows that there were good reasons for the plaintiff to wait in that case because of the pendency of an appeal against the order of requisition of the suit property. We may reiterate that the true principle is the one stated by the Constitution Bench in Chand Rani1. Even where time is not of the essence of the contract, the plaintiffs must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property.
(ii) 2011(12) SCC 18 [Saradamani Kandappan vs. S.Rajalakshmi and others]
36. The principle that time is not the essence of the contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not the essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period of performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.
41. A correct prospective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S.Vidyanadam v. Vairavan (by Jeevan Reddy,J.,) who incidentally was a member of the Constitution Bench in Chand Rani. This Court observed:
"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect ...............in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades particularly after 1973*.
11.We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties fuelled by large-scale migration of people from rural areas to urban centres and by inflation. ...........Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties evolved in times when prices and values were stable and inflation was unknown requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so."
42. Therefore, there is an urgent need to revisit the principle that time is not of the essence of the contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and others cases. Be that as it may.
43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S.Vidyanadam.
(i) The Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.
(iii) 2011(6) CTC 112 (SC) [Citadel Fine Pharmaceuticals vs. Ramaniyam Real Estates P.Ltd. And another]
45. In K.S. Vidyanadam and others vs Vairavan, 1997 (1) CTC 628 (SC) : 1997 (3) SCC 1, this Court explained how discretion is to be exercised by the Court before granting specific performance. This Court held that in cases of urban properties in India it is well known that prices are going up sharply over the last few decades particularly after 1973. In Vidyanadam (supra) the Court was dealing with a property in Madurai in the State of Tamil Nadu and it was argued before this Court by referring to the Madras High Court judgment in S.V. Sankaralinga Nadar vs P.T.S. Ratnaswami Nadar, AIR 1952 Mad 389, that mere rise in price is no ground for denying the specific performance. This Court did not agree with the decision of the Madras High Court and held that the Court cannot be oblivious of the reality of constant and continuous rise in the value of urban properties. In that context the time limit set in the contract has to be strictly construed. In the case of Vidyanadam (supra) there is no such strict stipulation as time being of the essence of the contract as is in the instant case even then the Court refused to grant the relief of specific performance.
46. In Vidyanadam (supra) reference was made to a Constitution Bench judgment of this Court in Chand Rani (Smt.) (Dead) by Lrs. vs Kamal Rani (Smt.) (Dead) by Lrs., 1993 (1) SCC 519. The same question, whether time was of essence of the contract was discussed in Chand Rani (supra). The Constitution Bench of this Court while dealing with this question referred to another decision of this Court in the case of Hind Construction Contractors by its Sole Proprietor, Bhikamchand Mulchand Jain (Dead) by Lrs. vs State of Maharashtra, 1979 (2) SCC 70. By referring to various judgments, the Constitution Bench in Chand Rani (supra) formulated the proposition that even where parties have expressly provided time to be of the essence of the contract, such a stipulation will have to be read along with other terms of the contract. Such other terms, on a proper construction, may exclude the inference that the completion of work by a particular date was meant to be fundamental. The learned Judges indicated the following circumstances which may indicate a contrary inference; (a) if a contract includes clauses providing for extension of time in certain contingencies, or (b) if there are clauses for payment of fine or penalty for every day or week the work undertaken remains unfinished after the expiry of time. The Constitution Bench held that such clauses would be construed as rendering ineffective the express provision relating to time being of the essence of contract (see para 22 at page 528 of the report).
47. In the instant case, in the said agreement no such clause, as aforesaid, exists. Rather the stipulation as time being of the essence of the contract was specifically mentioned in Clause 10 and the consequences of non-completion are mentioned in Clause 9. So from the express terms of the contract and the commercial nature of the transaction and the surrounding circumstances make it clear that the parties intended time in this case was intended to be of the essence of the contract.
A mere running of the eye over those precedents would highlight that the meagreness of the quantum of price specified in Ex.A2, the agreement to sell alone cannot be a reason for rejecting the prayer for specific performance; once it is held that Ex.A2 is a document, which emerged genuinely, the question of refusing specific performance on the ground that the sale price contemplated therein was low, is against law. Such a plea of the defendants cannot also be countenanced and upheld.
44. Accordingly, the points are decided as under:
Point No.1 is decided to the effect that the trial court was justified in not accepting the plea of the defendants in the wake of the evidence adduced on the side of the defendants vis-a-vis the evidence adduced on the side of the plaintiff.
Point No.2 is decided to the effect that the trial court did not take into consideration before decreeing specific performance, the readiness and willingness on the part of the plaintiff in performing his part of the contract. However this court being the first appellate court, based on the available evidence holds that the plaintiff was always ready and willing to perform his contract.
Point No.3 is decided to the effect that the suit property was not under-valued as per Ex.A2, the agreement to sell.
45. On balance, I am of the considered view that except for enhancing the sale price, as per Ex.A2 itself, no interference in the judgment and decree of the trial court is warranted. Accordingly, the appeal is partly allowed as under:
The plaintiff is directed to deposit in total a sum of Rs.7,77,000/-, deducting the sum of Rs.1,00,000/- which was already paid in favour of the defendants as per Ex.A1, which comes to Rs.6,77,000/- (Rupees six lakhs and seventy seven thousand only). It is not readily known as to whether as per the trial court's order the amount specified in the decree was deposited by the plaintiff; if not, the said entire sum of Rs.6,77,000/- (Rupees six lakhs seventy seven thousand only) shall be deposited within a period of one month from the date of receipt of a copy of this order and if already, as per the decree of the lower court, the amount was deposited, the remaining amount alone as per this decree shall be deposited within the said time. However, there is no order as to costs. Consequently, the connected miscellaneous petition is closed.
vj2 To The Additional District Judge (Fast Track Court), Namakkal