Madhya Pradesh High Court
Leeladhar Yadav vs Siddhartha Housing Co-Operative ... on 21 October, 2005
Equivalent citations: AIR2006MP155, 2005(4)MPHT441, AIR 2006 MADHYA PRADESH 155, 2006 (6) ALL LJ NOC 1320, 2006 (6) ABR (NOC) 986 (MP), 2007 AIHC NOC 151, (2006) 3 JAB LJ 424, (2006) 2 MPLJ 329, (2005) 4 MPHT 441, (2007) 1 CIVLJ 140, (2006) 3 RECCIVR 184
Author: Arun Mishra
Bench: Arun Mishra, U.C. Maheshwari
JUDGMENT Arun Mishra, J.
1. This appeal has been preferred by the defendant aggrieved by judgment and decree dated 21st November, 2003 by which learned District Judge, Jabalpur has decreed the Suit No. 11-A/2002 directing the specific performance of contract of sale.
2. In short the plaintiff's case, as averred in the plaint, shows that defendant owned 2.588 hectare of land comprised in Survey Number 189/6 situated at Mouza Baitala, an agreement was entered into by Siddhartha Housing Cooperative Society Ltd. (hereinafter referred to as "Cooperative Society") for purchasing of the land from Shri Liladhar Yadav/defendant at the rate of Rs. Two Lac per acre, agreement was executed on 8-5-96, an advance of Rs. One Lac was paid to the defendant, by mistake Survey No. 189/6 was wrongly typed as Survey No. 181/6. The defendant was paid further sum of Rs. 10,000/-on 20-12-97, Rs. 5,000/- on 24-12-99, Rs. 10,000/- on 8-3-2000 and Rs. 5,000/-on 28-12-2000. It was averred that defendant had agreed to level the land by Bulldozer. Permission from Ceiling Authority was also to be obtained. Defendant shall intimate about the permission and within four months, defendant shall execute a sale deed after receiving the balance consideration. Defendant did not obtain no-objection certificate from Competent Authority (Ceiling), Jabalpur. The plaintiff served the defendant with a notice dated 3rd June, 1997 which was received by the defendant on 7-6-97, no reply was given, the Ceiling Act was repealed by the State Government in March, 2000. Thereafter the President of the plaintiff/society orally requested to execute the sale deed in favour of plaintiff/society, but the defendant avoided to execute the sale deed on one pretext or the other. The plaintiff/society has sufficient fund for execution of sale deed. It was and is ready and willing to perform its part of contract, but the defendant is avoiding to perform his part of contract. Plaintiff served the defendant with a notice dated 17th July, 2002 to execute the sale deed. Notice was received back with the remark that recipient has died, thereafter a telegraphic notice was sent on 21-7-2002, no reply was received, plaintiff got the notices published in newspapers Navbharat and Dainik Bhaskar, Jabalpur dated 18th September, 2002. The defendant published a notice in daily newspaper Dainik Bhaskar dated 25-9-2002 that notice published by the plaintiff was false and it was mentioned that advance given by the Society stood forfeited. Hence, suit was filed for specific performance of contract of sale, plaint was presented on 11-10-2002.
3. In the written statement filed by defendant it was contended that land is situated adjoining to the road, price was settled at Rs. 2 lacs per acre, out of Rs. 12 lacs only a sum of Rs. 1 lac was given. The defendant was in a position to execute the sale deed immediately, but the plaintiff had no money to get the sale deed executed and wanted time to collect the funds, aforesaid land was not at all involved in any ceiling case, as they had no arrangement of funds, it was mentioned in the agreement that permission of Ceiling Authority has to be obtained, there was no dispute about the measurement, leveling of the land was got done within a period of one month, within four months next thereafter sale deed was not got executed as there were no arrangement of funds with the Society, number was incorrectly mentioned in the agreement, however, that is of no consequence. Against the settled terms, only Rs. 30,000/- was paid on different dates subsequently. Plaintiff was not ready to purchase the land nor willing to perform its part of the contract, value of the land was much more. Defendant agreed because he required money for treatment of his mother. Real value was more than Rs. 3 lacs per acre, agreement has already come to an end, as there was failure on part of plaintiff to carry out its obligation, there is no subsisting cause of action against the defendant. Suit is barred by time. In case, specific performance is ordered, the defendant will be put to heavy loss as his mother was ailing, it would give unfair advantage to the plaintiff in case specific performance is ordered. There is no equity in favour of plaintiff and substantial loss is likely to result to the defendant, hence, suit be dismissed.
4. Learned Trial Court framed as many as ten issues. It has come to the conclusion that it was agreed that defendant shall get the clearance from the Competent Authority (Ceiling), it was also agreed that land shall be levelled by the defendant and measured. Plaintiff/society was not having funds, however, President was willing to give the funds to the Society to carry out the obligation. Plaintiff was always and still ready and willing to perform its part of contract. Suit was not barred by limitation, agreement was not entered into to meet the treatment expenditure of mother.
5. Aggrieved by judgment and decree passed by learned District Judge, this first appeal has been preferred by the defendant.
6. Shri Ravish Agarwal, learned Senior Counsel assisted by Shri Pranay Verma has submitted that agreement was entered into on 8-5-96, suit was filed in October, 2002, it was highly belated, gives unfair advantage to the plaintiff/society, plaintiff/society was never ready and willing to purchase the land as it had no arrangements of funds, personal funds of the President of Society could not be treated to be the funds of Society as such gross illegality has been committed by the learned District Judge while decreeing the specific performance of contract. Leveling of land was made way back in the year 1996 itself as apparent from receipts, it was not necessary to obtain permission of Urban Land Ceiling Authority and in any case Urban Land Ceiling Act was repealed on 8th March, 2000, even thereafter for two years plaintiff has waited before serving notice which was belated one, as the plaintiff had no money agreement had come to an end, the earnest money stood forfeited, notice was rightly published by the defendant in the newspaper, there was complete silence for several years, there is phenomenal increase in the price of the land as such it would not be proper to grant and sustain the decree for specific performance.
7. Shri A.G. Dhande, learned Senior Advocate appearing with Shri Saurabh Tiwari for respondent contended that readiness and willingness of the plaintiff/cooperative society has to be seen in terms of the agreement and the conduct of defendant whether defendant has carried out the obligation enjoined upon him, it was necessary to get the land levelled and to obtain the permission of Ceiling Authority, however, it was also necessary for the defendant to get the land measured, none of the obligations were carried out as such time was not essence of the contract, defendant had accepted further sum of Rs. 30,000/- after 1996, thus, plaintiff is entitled for specific performance, money which was brought to the Court by President of the Society was money in hand for the benefit of Society. Hence, Society had the arrangement of requisite money right from beginning till passing of decree. Thus, the discretion has been rightly exercised by learned Trial Court in the case of price escalation, an additional amount can be ordered to be paid which may be considered just, hence, no case for interference is made out in the facts and circumstances of the instant case to interfere with the judgment and decree passed by learned Court below. The plaintiff/cooperative society has examined only one witness, that is, Shri Tarachand President of the Society, on the other hand, defendant Shri Liladhar Yadav had examined himself.
8. The main question for consideration is whether plaintiff was ready and willing to perform its part of the contract. The submission raised by Shri Ravish Agarwal, learned Senior Counsel is that Co-operative Society had no arrangement of funds at any point of time, it has failed to prove that it had funds to purchase the land, hence, specific performance could not have been ordered. Statement of Shri Tarachand (P.W. 1) indicates that he had brought a sum of Rs. 12 lacs in cash to the Court, initially in Para 4 of his cross-examination he has stated that money which he carried was of the Society, later on in the same paragraph he has clearly admitted that he has not produced the book of accounts and pass book of society, he has clearly admitted that money which he had brought to the Court was of his own which he has retained so as to rescue the Society. He has further admitted that it was correct that Society never possessed the funds to the extent of Rs. 12 lacs whereas Society is the purchaser of land in question. Perusal of authorization in favour of plaintiff to file the suit on behalf of the Society indicates that there were different members in the Executive Committee of the Society, it was not a case of purchase of land by Shri Tarachand, President of the Society for himself, it was necessary to the plaintiff/cooperative society to prove that Cooperative Society which consisted of large number of members was having funds for purchase of the land as land was not to be purchased by single member but by the Society for benefit of members and in view of the clear admission made by Shri Tarachand, President of the Society that at no point of time, the Society had the fund to the extent of Rs. 12 lacs, accounts book and pass book of Cooperative Society have not been produced, on the other hand there is categorical statement made by Shri Liladhar Yadav that Society had no arrangement of funds at any point of time, hence, was delaying the execution of sale deed on one pretext or the other. There was no ceiling case as against him, leveling was got done by making expenditure of Rs. 20,000/- as per receipt D-1 and D-2 way back in the year 1996. When plaintiff has served a notice (P-6) on 3-6-97, why it waited for more than six years is explained by the fact that Cooperative Society had no arrangement of money at any point of time, hence, execution of sale deed was delayed inordinately for more than six years. Urban Land Ceiling Act was repealed in March, 2000, leveling of the land was got done by defendant in the year 1996 as evinced by the receipt D-l and D-2, thus, the only plausible explanation for non-execution of sale deed is that plaintiff/cooperative society had no arrangement of money and the money which was brought to the Court was personal money of the President, it was not the fund of the Cooperative Society, thus, it is clear that Cooperative Society has utterly failed to prove that it had arrangement of money to purchase the land, in view of categorical admission made by Shri Tarachand, in my opinion, it was not open to learned District Judge to decree the suit for specific performance of contract of sale. Even the District Judge has found that Cooperative Society had no arrangement of money, but President was having the money, money of the President which was not of Cooperative Society as Society is distinct entity than an individual. Readiness and willingness of the Society that is of large number of persons forming the Society was required to be seen and whether they had made any effort after entering into an agreement to purchase the property within reasonable proximity of time. No such evidence has been adduced, only the resolution has been placed on record authorizing the President to file the suit. It is nowhere mentioned in the resolution that Society had the money as the land was to be purchased for the benefit of various members not for the benefit of President in person. The defendant has clearly stated that value of the land was more than Rs. 3 lacs per acre and it is clear that after repeal of Urban Land Ceiling Act, price of land has escalated much more and plaintiff had no arrangement of money, thus, it would be inequituous to order specific performance in favour of Cooperative Society.
9. It has been laid down by the Apex Court in N.P. Thirugnanam (D) by Lrs. v. Dr. R. Jagan Mohan Rao and Ors., AIR 1996 SC 116 that in a suit for specific performance it is necessary for the plaintiff to prove readiness and willingness and to show that whether "plaintiff prior and subsequent to filing of suit had the amount of consideration which he has to pay to the defendant which as of necessity be proved to be available right from the date of execution of agreement till date of decree". The Apex Court has laid down thus:
"5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the Court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short, "the Act"). Under Section 20, the Court is not bound to grant the relief just because there was valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The Court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and wiling to perform his part of contract."
In the instant case plaintiff/cooperative society has utterly failed to prove that it had arrangements of funds either prior to the date of suit from the date of agreement till passing of decree, thus, the suit for specific performance of contract of sale could not have been decreed.
10. In K.S. Vidyanadam and Ors. v. Vairavan, (1997) 3 SCC 1, the Apex Court has laid down that in the case of agreement of sale relating to immovable property time is not essence of the contract, however, Court is required to look into all the relevant circumstances in order to find out whether it is proper to decree the specific performance. Though Article 54 of Limitation Act provides limitation of three years from the date of refusal to execute the sale deed, but it should be performed within reasonable time having regard to terms of contract prescribing a time limit. Steep rise in the price of the property would be relevant factor for the Court to decide whether delay or laches on part of the plaintiff to perform his part of contract would this entitle him the relief of specific performance. The Apex Court has laid down thus:
"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 things 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-limits(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 Rani, :
"...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 agreement and determine whether its discretion to grant specific performance should be exercised."
Gauged in the light of the law laid down by the Apex Court in K.S. Vidyanadam (supra), agreement was executed in the year 1996, consideration was approximately Rs. 12 lacs, leveling was completed in the year 1996 itself, there was no ceiling case when notice was served in the year 1997, plaintiff should not have waited for filing of the suit till October, 2002 for more than six years, Ceiling Act was also repealed in March, 2000, then there was silence for 2 years, thus, owing to delay which has taken place the money Rs. 12 lacs which was required to be put in hands of defendant way back in the year 1996 was deprived for a long period of six years, the money which was retained by plaintiff was substantial money, merely making payment of paltry sum of Rs. Thirty Thousand, that too in installments of Rs. 5,000-10,000/-, that too up to 2000 not thereafter is of no avail. Total consideration of Rs. 1,30,000/- was paid, thus, the money which was retained by the plaintiff was substantial amount as compared to total sale price and sale deed was not got executed as Cooperative Society had no arrangement of funds. Defendant was deprived of deriving the benefit of money which ought to have been paid to him within reasonable time considering the nature of agreement which required that from the date of permission of Ceiling Authority within four months the sale deed was to be executed, Ceiling Act was repealed, in any case, in 2000, even within four months thereafter sale deed was not got executed. Thus, the delay gives unfair advantage to the plaintiff and they were not ready and willing to purchase the property for want of arrangement of consideration is clear.
11. In Manjunath Anandappa URF Shivappa v. Tammanasa and Ors., , the Apex Court has laid down that there should be substantial compliance to show the readiness and willingness to perform the part of contract. Merely payment of Rs. 30,000/- in instalments can not go to show readiness and willingness of the plaintiff, plaintiff was gaining the time as it had no arrangement of fund. Thus, payment of paltry sum can not come to rescue of the plaintiff as it had no arrangement of fund for payment of consideration. The Apex Court has held thus:
"15. Forms 47 and 4 of Appendix A of the Code of Civil Procedure prescribe the manner in which such averments are required to be made by the plaintiff. Indisputably, the plaintiff has not made any averments to that effect. He, as noticed hereinbefore, merely contended that he called upon defendant 2 to bring defendant 1 to execute a registered sale deed. Apart from the fact that the date of the purported demand has not been disclosed, admittedly, no such demand was made upon defendant 1. We may notice, at this juncture, that the plaintiff in his evidence admitted that defendant 1 had revoked the power of attorney granted in favour of defendant 2. In his deposition, he merely stated that such revocation took place after the agreement for sale was executed. If he was aware of the fact that the power of attorney executed in favour of defendant 2 was revoked, the question of any demand by him upon defendant 2 to bring defendant 1 for execution of the agreement for sale would not arise at all. Furthermore, indisputably the said power of attorney was not a registered one. Defendant 2, therefore, could not execute a registered deed of sale in his favour. The demand, if any, for execution of the deed of sale in terms of the agreement of sale could have been, thus, made only upon defendant 1, the owner of the property. The balance consideration of Rs. 10,000/- also could have been tendered only to defendant 1. As indicated hereinbefore, the purported notice was issued only on 8-8-1984, that is, much after the expiry of the period of three years, within which the agreement of sale was required to be acted upon."
12. Shri A.G. Dhande, learned Senior Counsel appearing on behalf of plaintiff/respondent has relied upon a decision in Swarnam Ramachandran (Smt.) and Anr. v. Aravacode Chakungal Jayapalan, , in which the Apex Court has laid down that it is necessary to keep the contract alive and to show that he had not abandoned the contract, as the payments were made contract was kept alive. As the contract was for a total sum of Rs. 12 lacs, earnest money of Rs. 1 lac was paid, thereafter within four years in instalments of Rs. 5,000/- - Rs. 10,000/- further sum of Rs. 30,000/- was paid, that would not show that contract was kept alive, it could not be kept alive for want of readiness and willingness to make payment of consideration as deposed by defendant that whenever he asked to get the sale deed executed, he was told that Society was not having the money, they were arranging the money, even in the Court the arrangement was not established, thus, decision in Swarnam Ramachandran (supra) is of no avail to plaintiff.
13. The submission raised by Shri A.G. Dhande, Sr. Advocate that land was not got measured by the defendant, area was specifically mentioned in the agreement and measurement is done immediately before or at the time of execution of sale deed. At no point of time for several years any serious effort was made by the Society. Merely serving a notice on 17th July, 2002, telegraphic notice on 21st July, 2002 and newspaper publication on 14th September, 2002 can not constitute readiness and willingness as plaintiff had no arrangement of money even on the date of the aforesaid notice. Notice (D-1) was published by defendant of the cancellation of contract in September, 2002.
14. In P. D'Souza v. Shondrilo Naidu, (2004) 6 SCC 649, both the learned Counsel for parties have placed reliance, Shri Ravish Agarwal, Sr. Advocate for appellant on Para 16 which reads thus:
"16. Mr. Bhat would further submit that in a case of this nature where the decree for specific performance of contract has not taken effect of a long time, this Court having regard to the escalation in price, refused to exercise its discretionary jurisdiction in granting a decree for specific performance of contract. Reliance in this behalf has been placed on Nirmala Anand v. Advent Corporation (P) Ltd., ."
whereas Shri Dhande, Sr. Advocate has placed reliance on Para 24 to contend that defendant has revived the contract at a later stage. Apex Court has held in P.D'Souza (supra), in Para 24 thus:
"24. In August, 1981 the defendant accepted a sum of Rs. 20,000/-from the plaintiff. The contention raised on behalf of the appellant to the effect that the plaintiff has failed to show her readiness and willingness to perform her part of contract by 5-12-1978 is stated to be rejected inasmuch as the defendant himself had revived the contract at a later stage. He, as would appear from the findings recorded by the High Court, even sought for extension of time for registering the sale deed till 31 -12-1981. It is, therefore, too late in the day for the defendant now to contend that it was obligatory on the part of the plaintiff to show readiness and willingness as far back as 5-12-1978."
The aforesaid dictum does not lend any support to the plaintiff, however, buttressed the submission of Shri Agarwal that after a long time Court can refuse exercise of discretionary jurisdiction in granting a decree for specific performance of contract.
15. Shri Dhande, Sr. Advocate has further relied upon a decision in Pukhraj D. Jain and others v. G. Gopalakrishna, to contend that it is from the date of refusal to execute the sale deed limitation starts to file the suit. There is no dispute with the aforesaid proposition. At the same time, Apex court has laid down that continuous readiness and willingness from the date of contract till hearing of the suit has to be proved. After serving notice in the year 1997, there was enormous delay on part of the plaintiff which negates readiness and willingness in the aforesaid facts.
16. In Nirmala Anand v. Advent Corporation (P) Ltd. and Ors., , the Apex Court has laid down that in case of phenomenal increase in price of land during pendency of litigation, Court may impose reasonable condition in the decree including payment of additional amount by plaintiff/purchaser. We are not inclined to adopt the aforesaid course in the facts of this case as plaintiff has not been able to establish that Society had requisite money with it to carry out its obligation. The decision in Rachakonda Narayana v. Ponthala Parvalhamma and Anr., , has also pressed into service in which the Apex Court has laid down that in case other party is ready to pay or had paid full of the agreed amount, other party should be asked to fulfill the promise unless there is delay or laches or any other disability on part of other party. The Apex Court has held thus:
"8. A perusal of Sub-section (3) of Section 12 shows that the first part of the said provisions mandates refusal of specific performance of a contract on certain conditions. However, the latter part of the provisions permits a Court to direct the party in default to perform specifically so much of his part of the contract as he can perform if the other party pays or has paid the agreed consideration for the whole of the contract and relinquishes all claims to the performance of the remaining part of the contract and all the rights to compensation for the loss sustained by him. If a suit is laid by the other party, the Court may direct the defaulting party to perform that part of the contract which is performable on satisfying two preconditions, i.e., (i) the plaintiff pays or has already paid the whole of the consideration amount under the agreement, and that (ii) the plaintiff relinquishes all claims to the performance of the other part of the contract which the defaulting party is incapable to perform and all rights to compensation for loss sustained by him. Thus, the ingredients which would attract specific performance o the part of the contract, are: (i) if a party to an agreement is unable to perform a part of the contract, he is to be treated as defaulting party to that extent, and (ii) the other party to an agreement must, in a suit for such specific performance, either pay or has paid the whole of the agreed amount, for that part of the contract which is capable of being performed by the defaulting party and also relinquish his claim in respect of the other part of the contract which the defaulting party is not capable to perform and relinquishes the claim of compensation in respect of loss sustained by him. If such ingredients are satisfied, the discretionary relief of specific performance is ordinarily granted unless there is delay or laches or any other disability on the part of the other party."
The aforesaid decision is of no utility to the plaintiff as there was delay on part of the plaintiff and the plaintiff had no arrangement of consideration and owing to the delay decision militates against the cause espoused by the plaintiff.
17. Shri Dhande, Sr. Advocate has also relied upon a Division Bench decision of this Court in Mulla Badruddin v. Master Tufail Ahmed, to contend that merely publication of the notice of forfeiture of the amount without giving a reasonable notice can not be said to be proper, no doubt notice of cancellation was published by the defendant. We are not taking the contract to be cancelled by publication of notice by defendant but we have considered all the facts and circumstances of the case and we have found that Trial Court has committed gross illegality while decreeing the suit for specific performance. However, as Rs. 1,30,000/- was paid by the plaintiff/society, we direct refund of the aforesaid amount to the plaintiff in order to do complete justice between the parties.
18. Resultantly, appeal is hereby allowed in part, judgment and decree passed by Trial Court is set aside. Refund of consideration of Rs. 1,30,000/-is ordered. Parties to bear their own costs as incurred of this appeal.