Andhra HC (Pre-Telangana)
Sampatlal Ramlal Kimtee (Died) And ... vs Ananth Vijay Shridhar Naik And Others on 6 November, 1998
Equivalent citations: 1999(2)ALD80, 1999(1)ALT184
Author: T. Ranga Rao
Bench: T. Ranga Rao
ORDER P. Ramakrishnam Raju, J.
1. Plaintiffs in both the suits are the appellants. They filed OS Nos.476 and 892 of 1983 on the file of VI Additional Judge, City Civil Court, Hyderabad for specific performance of two agreements of sale dated 23-4-1979 executed by defendants 1 and 2 along with their father, marked as Exs.Al and A2. Plaintiffs and defendants are common in both the suits, except Plaintiff No.8 in OS No.476 of 1983 who is said to be the subsequent agreement holder.
2. The extent of land covered by those two agreements for sale are 4 acres 1517 Sq. yards (Ex.A2) and 12 acres 2280 Sq. yards and the price stipulated is at the rate of Rs.81,000/- per acre. Plaintiffs have paid a sum of Rs.1,47,765/- and Rs.17,420/-to the defendants towards part payment in respect of those two agreements for sale. These facts are not in dispute.
3. According to the plaintiffs a formal exemption or permission under the Urban Land (Ceiling and Regulation) Act-hereinafter called the Act has to be obtained. It is agreed under Clause (IV) of the said agreements that plaintiffs should obtain necessary permission or exemption from the Urban Land Ceiling Act within a period of six months from the date of the agreements and the vendors should co-operate for getting the exemption from the competent authority. According to the plaintiffs, in pursuance of the agreements for sale, late Sridhar Vaman Naik filed a petition before the Special Officer, under the Act on 21-5-1979 seeking 'No Objection Certificate' for alienation of the land On 14-2-1980, defendant No.1 in collusion with the second defendant as well as his father-Shridhar Vaman Naik, wrote letter to the plaintiffs stating that permission from the Government was not obtained by the plaintiffs within the stipulated period, and as such, the agreements for sale are liable to be cancelled and the earnest money paid to them would be forfeited, since the time is the essence of the contract. However, plaintiffs replied to the said notice on 24-2-1980 refuting the allegations contending that the permission from the Urban Land Ceiling Authority is a mere formality and that they are ready and willing to perform their part of the contract by paying the balance amount and get the sale-deeds registered, since the Sub-Registrar is prepared to register the sale-deeds. Sri Sridhar Vaman Naik also wrote a letter dated 1-3-1980 stating that the defendants have no objection to register the sale-deeds if the Sub-Registrar has no objection for the same. However, it is stipulated that if the plaintiffs fail to get the same registered before 10-3-1980, the contract will stand cancelled. However, the first defendant by another letter dated 10-3-1980 extended lime for registration from 11-3-1980 to 10-4-1980.
4. Plaintiffs in their reply dated 12-3-1980 stated that time is not the essence of the contract and no lime limit can be fixed for registration. While matters stood thus, to the surprise of the plaintiffs on 11-8-1980 the first defendant issued a registered notice through his Advocate terminating the agreements tor sale. Hence the suits.
5. In a separate written statement filed by the second defendant, execution of suit agreements (Exs.A1 and A2) as well as payment of consideration, except a sum of Rs.8,000/- is admitted. The allegation that late Shridhar Vaman Naik has executed a fresh agreement for sale on 23-7-1980 is not true and even otherwise, it is not binding on defendants 1 to 3. It is stated that defendants are not members of joint family inasmuch as there was a division in view of the decree for partition in OS No.86 of 1972 on the file of the Additional Chief Judge, City Civil Court at Secunderabad passed on 7-3-1973. Therefore, late Vaman Naik is no more a Kartha of the joint family. It is claimed by defendants that time is the essence of the contract and inasmuch as permission under the Act could not be obtained by the plaintiffs within the time stipulated as per Clause IV of the agreements, plaintiffs are not entitled for the relief of specific performance of agreements for sale and the suit agreements have become frustrated.
6. The third defendant filed separate written statement contending that she is not a party to the agreements and inasmuch as she is having a 1/5th share in the said land, her share cannot be alienated by her husband-Shridhar Vaman Naik or by her sons, defendants 1 and 2, as such the agreements are not binding on her.
7. Defendants Nos.4 and 5 filed memo adopting the written statement filed by the second defendant.
8. Before the trial Court, plaintiffs 5 and 6 were examined as PWs.1 and 2 respectively and marked Exs.Al to A5. Defendant Nos.2 and 1 were examined as DWs.1 and 2 and marked Exs.B1 to B10. On a consideration of the evidence on record, the trial Court found that the suit is not bad for mis-joinder of parties; that the Court has jurisdiction to try the suits; that late Shridhar Vaman Naik extended time by another three months for obtaining permission from the Urban Land Ceiling Authority. It is found by the lower Court that the subsequent agreement (Ex.A37) alleged to have been executed by late Vaman Naik on 23-7-1980 is true and genuine. However, on the question whether time is the essence of the contract and whether non-availability of exemption certificate is a bar for enforcing agreements for sale, the lower Court found that time is the essence of the contract and that obtaining permission is a sine quo non for fulfilling the condition under Clause IV of the agreement and in the absence of such a permission, the contract has been frustrated and the same cannot be enforced. Since the contract is frustrated, the lower Court finally directed refund of the amount paid by the plaintiffs with interest at 12 per cent from the date of the agreements till the date of decree and at 6 per cent thereafter till payment.
9. Seeking the main relief of specific performance and questioning the said decrees, these appeals arc filed by the plaintiffs.
10. Now, the question that arises for determination in these appeals is whether permission for exemption under Seclion 20 of the Act is a condition precedent for enforcing the agreements for sale by way of specific performance?
11. Execution of suit agreements and part payment thereunder, except a sum of Rs.8,000/- are admitted by the defendants. Under Clause IV of the agreements, it is stipulated that the plaintiffs should obtain necessary permission under the Act within a period of six months from the date of execution of the suit agreements. However, by a letter, defendants 1 and 2 have extended time for registration of the documents by one month from 11-3-1980 to 10-4-1980. Under Clause IV of the suit agreements (Exs.Al and A2), plaintiffs have undertaken to obtain necessary permission or exemption from the Urban Land Ceiling Authority for executing the sale-deeds in respect of the suit land within a period of six months from the date of execution of the suit agreements and that defendants 1 and 2 and their father assured them of their co-operation. It is also stipulated in the agreements for sale that in case the Government does not accord permission for alienation of the suit land in favour of plaintiffs, defendants 1 and 2 and their father, should immediately return the entire amount received by them to the plaintiffs. In spite of extension of time by one month, as per Ex.A2S, plaintiffs could not obtain permission from the competent authority as required under Urban Land Ceiling Act for alienation of the suit land.
12. However, Sri P.S. Narayana, learned Counsel for the appellants submits that the lands are agricultural lands, and therefore, permission from the competent authority under the Act is not required and in any event such a permission is an empty formality.
13. Clauses IV and VI under the agreements for sale which are identical in terms may be usefully extracted hereunder:
"(IV) The purchasers agree that they would obtain necessary permission or exemptions at their expense, as arc necessary under any law, including the Urban Land Ceiling Act, for the sale of the said land, within a period of six months from the date of this agreement. However the vendors hereby assure that they shall render their whole-hearted co-operation to the purchasers in all respect in this connection, and shall give necessary letters, statement and sign all papers, layout plans etc., as may be required by the purchasers, for filing in Government departments, and undertake to do all that is necessary to effectuate a valid sale.
(VI) If the purchasers fail to get the land registered within the stipulated or extended period as the case may be, the purchasers hereby agree that the vendors will have the right to forfeit entire money paid today. However, in case the Government does not accord permission for alienation of the land into the purchasers or their nominees in whole or in parts, the vendors shall immediately thereafter return the entire advance amount to the purchasers in full."
14. A conjoint reading of these two clauses makes it clear that the purchasers have undertaken the responsibility of obtaining permission under the Act within a period of six months from the date of agreements, and in case purchasers fail to get the land registered within the stipulated or extended period, they agreed that the vendors will have the right to forfeit the earnest money paid. However, it is clear that in case the Government does not grant necessary permission, plaintiffs are entitled to recover the amount. Under Clause V parties contemplate execution and registration of sale-deeds within a period of six months from the date of receipt of permission for alienation from the competent authority, unless time is extended by mutual consent. Therefore, parties contemplated that plaintiffs should first obtain necessary permission and on such permission being granted execution and registration of sale-deeds shall be effected within a period of six months from the date thereof . Hence, we are of the view that plaintiffs have undertaken the responsibility to obtain necessary permission within a period of six months from the date of execution of agreements for sale or within the extended period thereafter. It is admitted that exemption under the Act is not granted so far. Therefore, the defendants have rightly contended that they have not committed any breach of the terms of the contract, but the contract has become frustrated in view of the inability of the plaintiffs to obtain necessary permission from the authorities even after a lapse of 19 years.
15. The plaintiffs have undertaken the responsibility of obtaining permission as per Clause IV of the agreements, cannot now turn round and say that permission is not really necessary but it is a mere formality. In fact, this contention also cannot be accepted in view of the fact that the Special Office-cum-Competent Authority has issued notices to late Shridhar Vaman Naik on 12-5-1980 treating the land in question as vacant land and also by another notice dated 25-5-1980 stating that the lands are classified as vacant lands falling under Urban Land Ceiling Act. Therefore, the contention of the plaintiffs that the lands are agricultural lands and as such, no permission need be obtained for alienation cannot be accepted.
16. Sri P.S. Narayana, learned Counsel for the appellants submits that it is the responsibility of the defendants to obtain necessary permission under the Act and plaintiffs are not supposed to secure any such permission. This submission cannot be accepted for two reasons. Firstly, parties contemplated that the required permissions should be obtained by the plaintiffs alone and as such we cannot shift the responsibility to the defendants to obtain such permissions. Who should apply and how it should be obtained are all matters for agreement between the parties and it is not for the Court to sit in the judgment over the same; and secondly, there is no embargo or prohibition under the Act for the purchasers to apply for permission, may be they are required to obtain the consent from the vendors. So, the obligation to obtain permission at the instance of the plaintiffs cannot be said to be impossible or irrelevant in the contract for sate of vacant land falling under the Urban Land Ceiling Act. Hence, this contention has no force.
17. There is another insurmountable difficulty for the plaintiffs to obtain a decree for specific performance on the basis of suit agreements. The third defendant has obtained 1/5th share under a partition decree in OS No.86 of 1972 dated 7-3-1973 and as such, defendants 1 and 2 and their father cannot alienate 1/5th share of the third defendant without her consent. Even the subsequent agreement executed by late Shridhar Vaman Naik under Ex.A37 which is executed by himself cannot bind either defendants 1 and 2 or the third defendant; inasmuch as he is not the Kartha of the joint family, as there was already disruption of the joint family status by virtue of filing of OS No.86 of 1972.
18. Sri P.S. Narayana, learned Counsel for the appellants submits that in any view of the matter there can be a conditional decree for specific performance of contract for sale of obtaining necessary permission from the competent authority. He relies on a Division Bench judgment of this Court in Dr. M. Devakumar Reddy v. V.S. Gopal Rao, 1989 (2) ALT 403. In that case, agreement of sale is dated 24-11-1978. As per Clause 5, the vendor shall obtain permission from the competent authority. Necessary permission was obtained on 9-1-1979 under the Urban Land Ceiling Act, as such, this decision has no bearing on the facts of the case on hand. In this case suit agreements came into existence as long back as on 23-4-1979 i.e., about more than two decades back. As such, granting further time for obtaining necessary permission from the competent authority would not be proper as held by the Apex Court in K.S. Vidyanadam v. Vairavan, , that even the agreements which do not stipulate time as essence of the contract, it should be performed within a reasonable period of time and not at any time as the plaintiff may choose. Since grant of relief under specific performance of agreement for sale is a discretionary relief, such a discretion has to be exercised taking into consideration the circumstances of each case.
19. In view of the observations of the Apex Court in Vidyanadam v. Vairavan (supra), it has to be held that this is not a fit case which justifies exercise of discretion in favour of plaintiffs in granting further extension of time for obtaining necessary permission from the competent authority.
20. The learned Counsel for the appellants placed reliance on a Full Bench decision of the Gujarat High Court in Shan Jitendra Nanalal v. Palel Lallubhai Ishverbhai, , to show that a conditional decree for specific performance for obtaining necessary exemption can be granted. We do not think it necessary to go into the question whether this Court has got power to pass a conditional decree, but the circumstances obtaining in he case on hand do not justify passing of such a conditional decree inasmuch as 20 years have elapsed after execution of suit agreements and plaintiffs could not obtain necessary permission or exemption till today. The lower Court in our view has come to a correct conclusion basing on proper appreciation of evidence and the circumstances of the case. Accordingly, while refusing the main relief of specific performance of the agreements for sale, it directed refund of the amounts paid under those agreements with interest. We do not find any ground to interfere with the said finding.
21. The appeals, therefore, fail and are accordingly dismissed. No costs.