Karnataka High Court
Rajendra W/O Balakrishna Desai vs Sangamnath S/O Gurusiddappa Bolmal on 19 September, 2019
Bench: L.Narayana Swamy, B.M.Shyam Prasad
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 19TH DAY OF SEPTEMBER 2019
PRESENT
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
AND
THE HON'BLE MR. JUSTICE B.M. SHYAM PRASAD
R.F.A. NO.4041 OF 2013
BETWEEN:
1. SHRI RAJENDRA
W/O BALAKRISHNA DESAI
AGE: 61 YEARS, OCC: BUSINESS
R/O TILAKWADI, BELGAUM - 590 003.
2. SHRI ANANT
S/O NARAYAN PATIL
AGE: 52 YEARS, OCC: BUSINESS
R/O HOUSE NO.1, RAJWAD COMPUND
MADHAVPUR & VADAGAON
BELGAUM - 590 005.
... APPELLANTS
(BY SRI. NAGANAND, SENIOR ADVOCATE FOR
SRI. M.G. NAGANURI, ADVOCATE)
AND:
SHRI SANGAMNATH
S/O GURUSIDDAPPA BOLMAL
AGE: 68 YEARS, OCC: LEGAL PRACTITIONER
R/O PLOT NO. 10-11
BEHIND FAMILY PLANNING OFFICE
ANGOL - BELGAUM - 590 006.
... RESPONDENT
(BY SRI. V.M. SHEELAVANT, ADVOCATE FOR C/R)
2
THIS R.F.A. IS FILED UNDER ORDER XLI RULE 1 READ
WITH SECTION 96 OF CPC 1908, AGAINST THE JUDGMENT AND
DECREE DATED: 19.01.2013 PASSED IN O.S. NO. 6 OF 2010 ON
THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE,
BELGAUM, PARTLY DECREEING THE SUIT FILED FOR SPECIFIC
PERFORMANCE OF CONTRACT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
11.07.2018 AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, B.M. SHYAM PRASAD J., DELIVERED
THE FOLLOWING:
JUDGMENT
This appeal is by the plaintiffs in O.S.No.6/2010 on the file of the I Additional Senior Civil Judge, Belgaum (for short, 'Civil Court'). The plaintiffs' suit insofar as prayer for specific performance of the sale agreement dated 8.12.2006 is dismissed; however, the alternative prayer for refund of Rs.5 lakhs with interest is decreed directing the respondent - defendant to refund the said amount of Rs.5 lakhs with interest at the rate of 6% per annum from 8.12.2006 till repayment of entire earnest money. As such, this first appeal.
2. For the purpose of convenience, the parties are referred to as they are arrayed before the Civil 3 Court. The plaintiffs' case is that the defendant, who is the owner of the non-agricultural land bearing RS No.57/L admeasuring 7 guntas [plot No.778 and 779 and 780 (part) of Angol, Belgaum Taluka and District] (referred to as 'the subject property') offered to sell the subject property to the plaintiffs. The plaintiffs and the defendant negotiated the terms of settlement, and it was agreed that the defendant would sell the subject property in favour of the plaintiffs for a total consideration of Rs.32 lakhs, and the plaintiffs, who should pay a sum of Rs.5 lakhs as an advance, should pay the balance sale consideration of Rs.27 lakhs and complete the sale transaction within a period of three months. Accordingly, the plaintiffs and the defendant entered into the sale agreement dated 8.12.2006 (hereinafter referred to as the 'Agreement').
3. The plaintiffs paid a total sum of Rs.5 lakhs by way of two separate cheques drawn in favour of the 4 defendant; one of the cheques was issued by the plaintiff No.1 and the other cheque was issued by the plaintiff No.2. The plaintiffs, as part of necessary due diligence to complete the sale transaction, took out public notice of their intention to purchase the subject property, and this public notice was published on 11.12.2006 in 'Tarun Bharat'.
4. The defendant's brothers filed objections asserting that the defendant alone could not have entered into any transaction for sale of the subject property because they also have undivided interest therein as the same is a joint family property. After receipt of these objections, the plaintiffs called upon the defendant to furnish copies of the title deeds. The defendant furnished documents, and after the scrutiny of these documents, it was ascertained that the subject property was allotted to the defendant in a partition and the revenue records were made in the name of the 5 defendant pursuant to such partition. Therefore, the plaintiffs decided to overlook the objections, and called upon the defendant to receive the balance sale consideration and to execute the sale deed conveying the subject property in their favour.
5. The defendant, while agreeing to receive the balance sale consideration and to execute the sale deed, represented that he would complete the sale transaction in the last week of April 2007, and such deferment would be convenient for him because it would be after the closure of the financial year. But, the defendant went on postponing the completion of the sale transaction. Therefore, the plaintiffs caused legal notice dated 23.06.2007 calling upon the defendant to execute the sale deed and complete the transaction. The defendant received this notice on 26.6.2007, but neither replied to the legal notice nor came forward to complete the sale transaction.
6
6. The plaintiffs were ready and willing to complete the transaction, and because the defendant was not completing the sale transaction, the plaintiffs were constrained to file the present suit for specific performance with the alternative relief for direction to refund the amount received along with interest. The plaintiffs filed the suit on 7.12.2009, but did not pay the prescribed court fee. The suit was adjourned on couple of occasions before the plaintiffs paid deficit court fee on 5.1.2010. This fact is being mentioned here because the civil Court has considered this as one of the circumstances that would be relevant for deciding whether the plaintiffs were ready and willing to perform their part of the transaction viz., tender the balance sale consideration of Rs.27 lakhs.
7. The defendant filed Written Statement denying the plaint averments, and inter alia asserting that the plaintiffs were aware that he would not be able 7 to transfer absolute title to the subject property, because it was a joint family property, but the plaintiffs induced him to enter into the Agreement with the false assurance that they would secure, within three months, the consent of the other co-owners for the transfer of the subject property in their favour. It was therefore specifically agreed that if the plaintiffs could not complete the sale transaction within the agreed period of three months, the agreement would stand cancelled and he shall be entitled to forfeit the advance amount. The plaintiffs, who had induced the defendant to enter into the sale agreement with false assurance, could not complete the sale transaction within the agreed time and therefore, the agreement stood cancelled and they cannot claim any right thereunder.
8. The defendant also contended that the plaintiffs were not ready and willing to pay the balance sale consideration and complete the sale transaction, 8 and insofar as his defense in this regard, the defendant also alluded to the fact that the plaintiffs had not paid proper court fee at the time of presenting the plaint, and the proper court fee was paid much later. The civil Court framed the following issues:
1. Whether the plaintiffs prove that defendant entered into an Agreement of Sale with plaintiffs on 8.12.2006 for sale of suit schedule property for a sale consideration of Rs.32 lakhs and received earnest money of Rs.5 lakhs.
2. Whether the plaintiffs are always ready and willing to perform their part of the contract.
3. Whether the plaintiffs are entitled for specific performance of the contract.
OR
4. Whether the plaintiffs are entitled for refund of earnest money of Rs.5 lakhs with interest at the rate of 18% from the defendant.
5. What order/decree.9
9. The plaintiffs examined the plaintiff No.2 as PW.1, and one of the attesting witness to the Agreement, Sri Chandrakant, S/o. Sharanappa Rastapur as PW.2. The plaintiffs marked different exhibits as Exs.P.1 to P.12, and these exhibits included the Agreement (Ex.P.11), publication of the Notice of intention to purchase (Ex.P.12), objections filed by the defendant's brothers (Exs.P.2 and P.3), the revenue records (Ex.P.1), copy of the legal notice dated 23.6.2007 (Ex.P.4) and the different bank account statements/extracts (Ex.P.6 to P.10). The defendant, on the other hand, did not enter the witness box, but his daughter, and power of attorney, is examined as DW.1. The defendant relied upon Ex.D.1 (power of attorney in favour of DW.1) and a Medical Certificate (Ex.D.2).
10. The civil Court, insofar as the Issue No. 1, upon appreciation of the evidence on record, including the evidence of DW.1 (who has categorically stated in 10 her evidence that the plaintiffs had been to her residence where the negotiations for the sale transaction were held, she was present at the time of execution of the Agreement and that the defendant gave instructions for inclusion of terms and conditions in the Agreement), concluded that the plaintiffs were successful in proving the due execution of the Agreement. However, as regards the other two Issues, which relate to the plaintiffs establishing their readiness and willingness to perform their part of the contract and the plaintiffs' entitlement to specific performance, concluded against the plaintiffs.
11. The civil Court has concluded that the plaintiffs have failed to establish their readiness and willingness to complete the sale transaction paying a sum of Rs. 27 lakhs for the following reasons.
Firstly, the period of 3 months contemplated under the Agreement was the essence of the contract 11 because the plaintiffs and the defendant had agreed that if the plaintiffs could not pay the balance sale consideration and complete the sale transaction within 3 months from the date of the Agreement, the defendant would be entitled to forfeit the advance amount of Rs. 5 lakhs. As such, the plaintiffs had to tender the balance sale consideration of Rs. 27 lakhs.
Secondly, it is specifically recited in the Agreement that the plaintiffs wanted some time to arrange the necessary finance and hence they were entering into the Agreement, and this demonstrated that the plaintiffs did not have the requisite funds with them as of the date of the Agreement.
Thirdly, in a suit for specific performance, the plaintiffs will have to prove that they were ready with the funds to complete the sale transaction from the date of the agreement to the date of plaint. However, the plaintiffs did not even pay the requisite court fee 12 simultaneously with the presentation of the plaint, but the Court fee was paid later.
Fourthly, though different bank statements/account extracts produced by the plaintiffs indicated that the plaintiffs had funds as of the date of the presentation of the plaint, it appears that the plaintiffs were not ready and willing to pay the balance sale consideration. The plaintiffs, who had issued Legal Notice dated 23.6.2007 calling upon the defendant to execute the sale deed within seven days, had not transmitted a cheque for Rs. 27 lakhs, and if they were really ready and willing to complete the transaction, they would have sent a cheque for Rs. 27 lakhs and called upon the defendant to execute the Sale Deed.
Fifthly, the defendant had received the legal notice on 26.6.2007, and though the plaintiffs had stipulated that he should come forward to execute the sale deed within seven days, the plaintiffs had not chosen to file 13 the suit for specific performance at the earliest. The suit is filed nearly after two and half years from the date of issuance of the aforesaid legal notice. The suit for specific performance is in time, but the fact that the plaintiffs did not file the suit at the earliest point of time, and the absence of any explanation for such delay also indicated that the plaintiffs were not ready and willing to complete the sale transaction.
12. The civil Court, insofar as the alternative prayer for refund of Rs. 5 lakhs, has concluded that the stipulation that the defendant would be entitled to forfeit the advance amount of Rs. 5 lakhs is one-sided, unilateral, unfair and arbitrary, and that this clause puts the plaintiffs in a disadvantageous position. The courts have discretionary power to order refund of the advance amount though the parties may have agreed that the person who has suffered default would be entitled to forfeit. In the facts and circumstances of the 14 case, the plaintiffs would be entitled for refund of the advance amount of Rs. 5 lakhs, and because the defendant has utilized such amount of Rs. 5 lakhs, he would be liable to pay interest at the rate of 6% per annum.
13. The learned Senior Counsel for the plaintiffs emphasized that the defendant, who had personal knowledge of the transaction, and the reason for the delay in the completion of the transaction as envisaged under the sale agreement, has not entered the witness box. He has deliberately stayed away from the witness box. His daughter is examined as DW.1. She is not personally acquainted with the facts and circumstances of the case, especially the reasons for the delay. Even according to her evidence, she was only aged about 18 years as of the date of the sale agreement. She has pleaded ignorance about the objections lodged by the defendant's brother, an indubitable fact as 15 demonstrated by Exhibit P-4. These circumstances demonstrated that the DW.1 had no personal knowledge of the transaction, or the reasons for the completion of the sale transaction being protracted. It is settled law that a power of attorney cannot depose for the principal in respect of a matter as regards which only the principal can have personal knowledge and could be cross-examined. As such, the plaintiffs' evidence essentially remained uncontroverted. The civil Court has not examined the relative strength of the respective cases from this perspective, and if thus examined, the plaintiffs would be entitled for specific performance of the agreement. In this regard the learned Senior counsel relied upon the decisions of the Hon'ble Supreme Court in S Kesri Hanuman Goud vs. Anjum Jehan and others1 and Man Kaur v. Hartar Singh Sangha2.
1 [2013] SCCR 420 2 [2010] 10 SCC 512 16
14. The learned Senior counsel also canvassed that the civil Court, despite concluding that the plaintiffs were able to establish that they had sufficient funds in the account as of the date of the suit (in terms of Ex.P.6 to P.10), erred in concluding that the plaintiffs had failed to establish their readiness and willingness because they had not sent a cheque for Rs. 27 lakhs along with the legal notice dated 23.6.2007 and not paid the court fee simultaneously with the presentation of the suit. The civil Court unjustly overemphasized the fact that the plaintiffs did not pay the complete court fee as of the date of the suit viz., 7.12.2009 and paid the complete court fee only on 5.1.2010 after a couple of adjournments overlooking the explanation offered by the plaintiffs in stating that they had only deferred payment of court fee because they hoped that the defendant, who was procrastinating the completion of the sale transaction, would complete the transaction after service of notice of the suit. However, the complete 17 court fee was paid within a month. The plaintiffs bona fide belief that they could defer paying the court fee in anticipation of a settlement could not have been construed as failure to establish readiness and willingness, and in support of this proposition relied upon the decision of the Hon'ble Supreme Court in similar circumstances in Surya Narain Upadhyaya v. Ram Roop Pandey and Others3.
15. Further, the learned Senior counsel, relying upon the decision of the Hon'ble Supreme Court in Chand Rani v. Kamal Rani4, argued that the civil Court has erred in concluding that the ''time was the essence of the contract''. It is settled law that there is no presumption as to time being the essence of contract, however the courts may infer that performance had to be within reasonable time from the express terms of the contract, or the nature of the property, and the 3 1995 Supp (4) SCC 542 4 AIR 1993 SC 1742 18 surrounding circumstances. The civil Court should have seen that though the plaintiffs and defendant had agreed that the plaintiffs should pay the balance sale consideration of Rs. 27 lakhs within 3 months from the date of the sale agreement and get the sale deed executed in their favour, the defendant (after the plaintiffs decided to overlook the objections filed by his brother), went on postponing the completion of the sale transaction for different reasons. Initially, it was for the reason that he wanted to complete the transaction in the last week of April 2007 i.e., after the closure of the financial year for reasons of convenience. The civil Court should have considered the defendant's conduct in postponing the transaction and the plaintiffs filing the suit within a period of limitation in the light of the settled law.
16. Furthermore, the civil Court has erred in its conclusion that the plaintiffs had failed in establishing 19 that they were ready and willingness to complete the sale transaction from the date of the agreement till the date of presentation of the plaint because it was categorically stated in the agreement that the plaintiffs needed some time to arrange finance to complete the transaction and they were not willing to pay even the complete court fee on the date of the presentation of the plaint. The settled law is that the plaintiffs in a suit for specific performance must establish their 'Readiness' by demonstrating their capacity and 'Willingness' by their preparedness to complete the sale transaction. The plaintiffs, who paid a sum of Rs. 5 lakhs as of the date of the sale agreement, demonstrated their capacity to complete the transaction by furnishing the details of different bank statements/account extracts as per Ex.P.6 to P.10 and also established their preparedness in taking out public notice of their intention to purchase the subject property, overlook the objections filed by the defendant's brother, issuing legal notice dated 20 23.6.2007 and repeatedly calling upon the defendant to close the transaction. The civil Court has failed to consider these circumstances, and has erroneously concluded that the plaintiffs are not entitled for specific performance.
17. The learned counsel for the defendant argued against the maintainability of the appeal by the plaintiffs relying upon the proposition that when the plaintiffs in a suit seeks an alternative prayer, and when such alternative prayer is granted by the court, the plaintiffs cannot challenge the refusal of the other relief. He relies upon decision of a learned single judge of this court in U G Sreenivasa Rao v. Vinay Kumar S Rao5. In this case, one of the points for consideration was "Whether appeal filed by the plaintiff would be maintainable in law in view of the fact that the alternative relief of refund of money had been granted by 5 LAWS (KAR) - 2004-3-7 21 the trial court". The learned single judge, relying upon the decision of the Division Bench of the High Court of Madras in Sakku Bai Ammal v R Babu Reddiar6, while declaring that he was in full agreement with the declaration of law by the aforesaid Division Bench, concluded that the appeal was not maintainable because all the reliefs were placed on par with each other, and the prayer for alternative relief having been granted, the plaintiffs' appeal was not maintainable.
18. The learned counsel for the defendant, insofar the merits, relied upon the decision of the Hon'ble Supreme Court in I S Sikander (Dead) by LRs v. K Subramani and others7 for the proposition that in case of sale of immovable property, time is not the essence of the contract. However, if the parties agree to a specified time in the agreement to perform their part of the contract, then such time would be the essence of the 6 AIR 1977 Madras 223 7 (2013) 15 SCC 27- Paragraph 40 22 contract and the parties shall adhere to the same. In this case it is undisputed that the plaintiffs and defendant had agreed that the plaintiffs must pay the balance sale consideration of Rs. 27 lakhs and obtain the sale deed for the subject property in their favour within a period of 3 months from the date of the sale agreement. Thus, the plaintiffs and defendant had stipulated the time within which the sale transaction had to be completed. They had also agreed that if the sale transaction is not completed within the agreed period of 3 months, and if the breach is by the defendant, the plaintiffs shall be entitled to seek specific performance. If the plaintiffs fail to pay the balance sale consideration, the defendant would have the right to forfeit the amount of Rs. 5 lakhs paid as advance with liberty to cancel the agreement and sell the subject property to any person. As such, the parties had not only stipulated the time for completion of the transaction but had also made the same the essence of 23 the contract. Therefore, the civil Court was justified in examining whether the plaintiffs were successful in establishing that they were ready and willing to complete the sale transaction within the said period of 3 months.
19. The learned counsel for the defendant emphasised that the civil Court had rightly appreciated the indisputable circumstances viz., it was stated in the Agreement that the parties were entering into a sale agreement instead of a sale deed because the plaintiff wanted time to arrange funds, the plaintiffs did not make any effort to tender the balance sale consideration of Rs. 27 lakhs and that they had not even paid the complete court fee simultaneously with the presentation of the plaint. The plaintiffs had also not offered any explanation for the delay in instituting the suit after two and half years from the date of issuance of legal notice dated 23.6.2007. The plaintiffs' case that the defendant 24 went on postponing the completion of the transaction for different reasons, and the plaintiffs believed that the defendant would complete the transaction is wholly unsubstantiated. In these circumstances, it cannot be concluded that the civil Court had erred in its conclusion that the plaintiffs had failed to establish that they were ready and willing to complete the sale transaction.
20. In the light of the rival submissions, the points for consideration in this appeal are:
(i). Whether the appellants-plaintiffs, whose suit insofar as the alternative prayer for refund of the advance amount of Rs. 5 lakhs with interest is decreed by the civil Court, can maintain this appeal challenging the civil Court's impugned judgment and decree insofar as the refusal of specific performance of the sale Agreement dated 8.12.2006 (Agreement).25
(ii). Whether any adverse inference is to be drawn against the respondent - defendant for not entering the witness box, and whether evidence of DW.1 (the power of attorney of the respondent-defendant) is to be discarded to the advantage of the appellants-plaintiffs.
(iii). Whether the civil Court is justified in its conclusion that the period of 3 (three) months as mentioned in the Agreement was intended to be the essence of the contract by appellants - plaintiffs and the respondent -
defendant.
(iv). Whether the civil Court is justified in its conclusion that the appellants - plaintiffs are not entitled for specific performance of the Agreement because they have failed to prove their ready and willingness, and whether any interference is called for in this regard.
(v) Whether the appellants- plaintiffs are entitled for specific performance of the Agreement.
(vi) What Order?
26Reg: Point No. (i):
21. The question whether a plaintiff who has been granted the alternative relief of refund of the advance amount paid under a sale agreement, can challenge the judgement insofar as the refusal of specific performance of the sale agreement, is considered by the Division Bench of the Madras High Court in Sakku Bai Ammal supra. The Division Bench has concluded that the plaintiff in seeking the alternative relief of refund on par with the relief of specific performance, will have elected to take either of the reliefs subject to the decision of the court. If after making such election, the plaintiff were to insist on the right to seek specific performance, it would amount to approbation and reprobation. Therefore, the plaintiff cannot take umbrage to the grant of the alternative relief of refund and file an appeal against the refusal of specific performance.
27
22. But, the Full Bench of the Madras High Court in Annapoorani Ammal (dead) and Others v. Ramaswamy Naicker and Others8, on a reference for reconsideration of the aforesaid Division Bench decision has, while referring to the decision of the Hon'ble Supreme Court in Ramesh Chandra Chandiok and another v. Chuni Lal Subharwal by his legal representatives and others9 has held as follows:
"The alternative relief would include the refund of any earnest money or deposit paid or made by the plaintiff. The grant of the alternative relief would arise only in case the plaintiff's claim for specific performance is refused. When the plaintiff asks for the alternative relief, there is no legal presumption or assumption that he gives up the main or primary relief of specific performance of the contract. The plaintiff primarily wants the relief of specific performance of contract and pleads that in case that primary relief is to be 8 1989 SCC Online Madras 83 as well as (1990) 1 LW 386 9 AIR 1971 SC 1327 28 refused he should be granted the alternative relief. It does not mean that when the primary relief is denied to the plaintiff, he could not be stated to be an aggrieved person in respect of the decree of the first Court, denying him that relief on the reasoning that he has obtained the alternative relief. The remedy of an appeal is of course open only to a person aggrieved by an order or decree of the first court. As to when a person could be stated to be an aggrieved person, so as to clothe him with the right of appeal, the rights conferred have got to be understood only in the context of the statute, which confers them. The decision of the first Court, insofar as it negatives the primary relief of specific performance, is materially adverse to the plaintiff. In other words, he has been denied or deprived of something to which according to the plaintiff he is entitled to. Viewed in the above light, certainly, an appeal by a plaintiff obtaining only the alternative relief of refund of the earnest money or advanced money, and who has been denied the relief of specific performance is a competent appeal. Insofar as 29 the first Court denied him the relief of specific performance, the plaintiff must be held to be an aggrieved person. There could be an exception and that is where the plaintiff has acted or conducted himself in such a manner as to approbate the benefit thereunder and in such a case, he cannot be permitted to reprobate the judgment by appealing against it."
23. It is after this exposition, the Full Bench overruled the observations in Sakku Bai Ammal supra contrary to the aforesaid exposition. In fact, the Allahabad High Court in Sunder Bai (Dead) by LRs v. Anandi Bi 10 following the decision by the Patna High Court in Union of India v. Garbhu Sao11 had held that the decision in Sakku Bai Ammal supra was incorrect. This Court can only be in respectful agreement with the decision of the Full Bench of the Madras High Court. A plaintiff, who has been refused the relief of specific 10 AIR 1983 Allahabad 23 11 AIR 1972 Patna 30 performance but granted the alternative relief of refund of advance part of the sale consideration, would be an 'aggrieved person' insofar as the refusal of the relief of specific performance, and there is nothing in the provisions of the Code of Civil Procedure to infer a bar against an appeal against a part of a decree by an aggrieved plaintiff.
24. Of course, if the plaintiff has done something that indicates he has approbated the judgment granting the alternative relief, as rightly observed, the plaintiff cannot reprobate the judgement. However, in the present case on hand, there is nothing to indicate that the plaintiffs have approbated the judgement granting refund of the advance of the sale consideration with interest at the rate of 6% per annum so as to conclude that in filing the present appeal, they are reprobating the judgement. As such, the first question is answered in favour of the appellants -plaintiffs and held that the 31 appeal cannot be dismissed on the ground that it is not maintainable.
Reg. Point No. (ii)
25. The Hon'ble Supreme Court in Man Kaur v. Hartar Singh Sangha12 has held that, "Where the law requires or contemplated the plaintiff or other party to proceed, to establish up to something with reference to his "state of mind"
or "conduct", normally the person concerned alone has to give evidence and not an attorney - Holder. A landlord who seeks eviction of a tenant, on the ground of his "bona fide" need and purchasers seeking specific performance who have to show "readiness and willingness" fall under this category. There is however a recognised exception to this requirement. Where all the affairs of the party are common completely managed, transacted and looked after by an attorney (whom may happen to be a close family member), it may be possible to accept the evidence of such attorney even with 12 (2010) 10 SCC 512 32 reference to bona fides or "readiness and willingness". Examples of such autonomy-
holders are a husband/wife exclusively managing the affairs of his/her spouse, a son/daughter exclusively managing the affairs of an old and infirm parent, a father/mother exclusively managing the affairs of a son/daughter living abroad.
The daughter of the defendant is examined as DW.1. She is categorical in her evidence that she was present when the negotiations for the sale transaction were held. She has also stated that her father, who was a medical practitioner in 2006, has stopped practicing because of his deteriorating health condition. She has further stated that she was residing in Raichur, but has shifted to Belgaum and she is residing with her ailing father. In support of her case that her father is ailing, and he may not be coherent in his evidence, has also produced Medical Certificate - Exhibit D.2. She has been subjected to sustained cross examination about 33 not only her personal acquaintance with the transaction but also about her father's ill-health. There is nothing on record to indicate that the examination of DW.2 would not come within the exception as explained by the Hon'ble Supreme Court. Therefore, the plaintiffs cannot seek any advantage on the ground that adverse inference will have to be drawn against the defendant because he did not enter the witness box.
26. Therefore, the second question is held against the plaintiffs and concluded that no adverse inference can be drawn against the defendant because he did not enter the witness box. The evidence of DW-1, his daughter, will have to be considered to assess the relative strengths of the respective cases. In any event, the plaintiffs will succeed insofar the prayer for specific performance only if they are able to establish that the personal bar under Section 16 (c) of the Specific Relief Act, 1963 is not attracted.
34Re: Point No. (iii) and (iv)
27. Though there was some dispute about the execution of the Agreement by the defendant, the civil Court has concluded that the plaintiffs are successful in establishing that the defendant executed the Agreement offering to sell the subject property on terms as are contained in the Agreement. The defendant has not challenged this finding. Therefore, the points now under consideration would be material to decide whether any interference is called for with the civil Court's impugned judgment. The Hon'ble Supreme Court in Chand Rani v. Kamal Rani supra has held as follows:
"From an analysis of the above case law 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 essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are: from the express 35 terms of the contract, from the nature of the property, and the surrounding circumstances."
28. The civil Court in its assessment of whether the time of 3 (three) months for completion of the sale transaction is the essence of the contract or not, has referred to 3 clauses in the Agreement. The first of the clauses stipulates that the plaintiffs shall pay the balance sale consideration of Rs. 27 lakhs within 3 (three) months from the date of the Agreement and get the sale deed executed in their favour. The second of the clauses stipulates that if the plaintiffs fail to pay the balance sale consideration within the said period of 3 (three) months, the defendant shall have the right to forfeit the advance amount and be at liberty to sell the subject property to any third person. The third of the clauses stipulate that if the defendant fails to execute the sale deed despite the plaintiffs offering the balance sale consideration, the plaintiffs shall have the right to 36 seek specific performance. It is on a conjoint reading of these clauses that the civil Court has concluded that time is the essence of the contract. However, the civil Court, in the considered opinion of this court, has overlooked certain material circumstances.
29. Under Clause 4 of the Agreement, the defendant is reserved the right to forfeit the advance amount of Rs. 5 lakhs and be at liberty to sell the subject property to any third party. Though the defendant contends that the plaintiffs are in breach in their failure to pay the balance sale consideration of Rs.27 lakhs, the defendant, until the date of Written Statement, did not put the plaintiffs on notice that the advance of Rs. 5 lakhs was forfeited and that he would put up the subject property for sale. But, the plaintiffs have caused legal notice dated 23.6.2007, which is admittedly served on the defendant on 26.6 2007. The plaintiffs in this Legal Notice have mentioned 37 postponement of the completion of the sale transaction to the last week of April, 2007 at the defendant's request, and further have mentioned that the defendant was avoiding completion of the sale transaction. The defendant has not responded to this legal notice.
30. Further, neither Clause 4 nor any other clause of the Agreement refers to the period -3 (three) months - as being the essence of the contract. Furthermore, the plaintiffs have stated that even after the issuance of legal notice dated 23.6.2007, they were waiting for the defendant to close the transaction, and only when they were constrained, they initiated legal proceedings. But, the defendant has neither initiated action as aforesaid nor offered any explanation for not initiating any action. DW.1, who has filed an elaborate affidavit in lieu of Chief-examination, has not stated anything about the measures taken to forfeit the advance and the action taken to inform the plaintiffs 38 about the cancellation of the Agreement, nor offered any explanation for not initiating any action. The defendant's defense taken for the first time in the Written Statement that, because of the provisions of clause 4, the Agreement stood cancelled with effect from 9.3.2007 is too contrived, and contrary to the agreed terms.
31. The civil Court without considering these circumstances, but only because the defendant is reserved the right to forfeit the advance and sell the subject property to a third-party, has concluded that the time was essence of the contract. The civil Court should have had a conspectus view of all the circumstances. In the light of these circumstances, this Court is of the considered view that the plaintiffs and defendant did not contemplate the period - 3 (three) months from the date of the Agreement - as being the 39 essence of the contract, and the civil Court has erred in its conclusion in this regard.
32. The civil Court's finding on the plaintiffs' 'Readiness and Willingness' is essentially predicated on four grounds. The plaintiffs even in the Agreement have accepted that they did not have the necessary funds to complete the transaction on the date of the Agreement itself, and they wanted time to mobilize funds for completion of the sale transaction. Though the plaintiffs have caused the legal notice dated 23.6.2007 calling upon the defendant to receive the balance sale consideration and to execute the sale deed within 7 days, they did not forward a cheque for the balance sale consideration of Rs. 27 lakhs along with the legal notice. The plaintiffs, who should have filed the suit for specific performance immediately after the lapse of the aforesaid 7 (seven) days, have filed the suit after two and a half years. The plaintiffs did not pay the court fee 40 simultaneously with the presentation of the plaint on 7.12.2009, and but they have paid the court fee only on 5.1.2010 i.e, after about 3 (three) weeks. The civil Court, for these reasons, despite holding that the plaintiffs in exhibiting Ex. P.6 - P.10 were able to establish that they had the requisite funds with them as of the date of the suit, has concluded that the plaintiffs were unsuccessful in establishing their 'Readiness and Willingness'.
33. However, in a suit for specific performance, the plaintiff will have to establish 'Readiness' and 'Willingness' with 'Readiness' connoting 'capacity to perform the essential terms of the contract' and 'Willingness' connoting mental preparedness to perform the essential terms of the contract respectively. There cannot be a straitjacket formula to assess 'Readiness' or 'Willingness', and these essentials will have to be determined from the plaintiff's overall conduct. The 41 defendant's conduct, while examining the plaintiff's 'Readiness' and 'Willingness' would be relevant to the extent that it could indicate whether the defendant's conduct could have in any manner obstructed the plaintiff's preparedness. A useful reference in this regard could be made to the decision of the Hon'ble Supreme Court in His Highness Acharya Swami Ganesh Dassji v. Sita Ram Thappar13 and Sathya Jain (Dead) through LRs and others v. Anis Ahmed Rashid14. The circumstances considered by the civil Court will have to be considered in the light of this settled law
34. The evidence of PW2, a relative of the defendant and an advocate, would be material as regards any inference to be drawn from the recital in the Agreement that the plaintiffs required time to pay the balance sale consideration and complete the sale transaction in the Agreement. This witness is 13 (1996) 4 SCC 526 14 (2013) 8 SCC 131 42 categorical that the Agreement was kept ready on 8.12.2006 by the time the plaintiffs came to the defendant's residence for sign up. The defendant signed the Agreement after receiving the cheque/s, and after the defendant signed the Agreement, the defendant's wife, his brothers and he attested the Agreement. Even DW.1 has admitted that the defendant insisted on inclusion of certain terms in the Agreement. PW.1 (plaintiff No. 2) has stated that 10% of the terms and conditions of the Agreement were incorrect, however this witness has not referred to which of the 10% of the terms and conditions of the Agreement was incorrect. If this recital in the Agreement is examined in the light of these circumstances, it could reasonably be concluded that inclusion of such recital in the Agreement will have to be viewed with circumspection, and examined in the context of the other circumstances.
43
35. It is undisputed that the plaintiffs took a public notice of their intention to purchase the property well within the period of 3 (three) months from the date of the agreement, and one of the defendant's brother lodged two objections contending that the defendant could not have executed the Agreement alone because the subject property was a joint family property. The plaintiffs in the immediate vicinity thereafter, caused legal notice informing the defendant that the plaintiffs were overlooking the brother's objections and they wanted to complete the sale transaction. But, the defendant did not respond to the legal notice howsoever.
36. The Plaintiff No. 2, who is examined as PW1, has spoken about the details of the different projects undertaken by him as the proprietor and also in partnership with his wife and the other plaintiff after the date of the Agreement. The plaintiffs have also furnished the Bank Statement/Account Extracts to 44 substantiate that they had sufficient funds with them to complete the transaction. There is no serious dispute about either the projects undertaken or the financial capacity of the plaintiffs, and in fact, the DW.1 has admitted that the plaintiffs could have purchased properties and undertaken developments in Belgaum after the Agreement.
37. These circumstances not only show that the plaintiffs had taken measures for completion of the transaction after the Agreement, but they also had the financial resources to complete the sale transaction. The plaintiffs' capacity viz., 'Readiness' is thus established, and even otherwise, the finding by the civil Court in this regard has not been challenged. The other two circumstances, which mitigate against the plaintiffs' 'Willingness' (the mental preparedness), in the opinion of the civil Court are the fact that the plaintiffs did not initiate the suit for specific performance immediately 45 after the expiry of 7 (seven) days mentioned in the legal notice dated 23.6.2007 and that they paid Court fee about 3 (three) weeks after the date of presentation of the plaint.
38. The Hon'ble Supreme Court in Surya Narain Upadhyaya v. Ram Roop Pandey and others supra, has not subscribed to the view that merely because the plaintiff paid deficit Court fee and did not make good such deficit for sometime, inference will have to be drawn that the plaintiff was not ready and willing to perform his part of the agreement. The plaintiffs in the present case, have made good the deficit Court fee within three weeks, and the explanation for deferment the plaintiffs, when examined in the context of the defendant's conduct, would seem rather bona fide. The explanation by the plaintiffs is that they were approaching the defendant and they believed that the defendant would execute the sale transaction. This will 46 have to be seen in the light of the defendant's case. The defendant has not offered any explanation either in the pleading or in the evidence to DW.1 why there was no response to the legal notice or communication to the plaintiffs about forfeiture. However, DW.1 has stated in her evidence that the agreement automatically stood terminated with the lapse of 3 (three) months and the advance forfeited. This is not part of the covenants in the Agreement. As such, no adverse inference could be drawn against the plaintiffs for deferring payment of court fee by about three weeks.
39. The fact that the plaintiffs initiated the suit after two and half years from the date of issuance of the legal notice dated 23.6.2007 will also have to be examined in the light of these circumstances and the settled law on the legal consequences that would ensue when the plaintiff, who is seeking specific performance 47 of the agreement to sell an immovable property, files the suit belatedly but within the limitation period.
40. The Hon'ble Supreme Court has considered this aspect in its recent decision in Madhukar Nivrutti Jagtap .v. Pramilabai Chandulal Parandekar15. The Hon'ble Supreme Court, referring to its recent decision in R Lakshmikantham v. Devaraji16 has held that when the suit for specific performance is filed within the period of limitation, delay cannot be put against the plaintiff. The Hon'ble Supreme Court in R Lakshmikantham v. Devaraji has held as follows:
"....In the aforesaid circumstances, the High Court was also incorrect in putting a short delay in filing the Suit against the plaintiff to state that he was not ready and willing. In India, it is well settled that the rule of equity that exists in England, does not apply, and so long as a Suit for specific performance is filed within the period of limitation, delay cannot be put against the 15 2019 SCC Online SC 1026 16 2019 SCC OnLine SC 907 48 plaintiff - See Mademsetty Satyanarayana v. G.Yelloji Rao and Others AIR 1965 Supreme Court 1405 (paragraph 7) which reads as under:-
"(7) Mr. Lakshamaihan cited a long catena of English decisions to define the scope of a Court's discretion. Before referring to them, it is necessary to know the fundamental difference between the two systems- English and Indian-
qua the relief of specific performance. In England the relief of specific performance pertains to the domain of equity; in India, to that of statutory law. In England there is no period of limitation for instituting a suit for the said relief and, therefore, mere delay - the time lag depending upon circumstances - may itself be sufficient to refuse the relief; but, in India mere delay cannot be a ground for refusing the said relief, for the statute prescribes the period of limitation. If the suit is in time, delay is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in either case, no question of equity arises". 49
41. The fact that the plaintiffs have filed the suit for specific performance within a period of 3 (three) years from the date of the cause of action, but after about two and half years from the date of issuance of legal notice dated 23.6.2007, is examined in the background of the facts and circumstances discussed supra (including the fact that the plaintiffs and the defendant did not stipulate that time would be the essence of the contract and the law referred to immediately above). This Court is of the considered view that the plaintiffs are also able to establish even their 'Willingness' viz., the mental preparedness to complete the transaction.
42. The next question would be whether the plaintiffs are entitled for specific performance of the Agreement because the finding that the Agreement is proved has remained unchallenged, and this Court on re-appreciation of the evidence on record, and in the 50 light of the settled law, has come to the conclusion that the plaintiffs are able to establish that they were ready and willing to complete the sale transaction. The Hon'ble Supreme Court in Nirmala Anand v. Advent Corp. (P) Ltd17., has declared as follows:
"It is true that grant of decree of specific performance lies in the discretion of the court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the considerations besides many others to be taken 17 (2002) 8 SCC 146 51 into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation.
While balancing the equities, one of the considerations to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing specific performance. There may be other circumstances on which parties may not have any control".
43. This proposition has been reiterated in the subsequent decisions as well. Insofar as the price escalation, it is suggested to the PW1 that the value of the subject property as of the date of the Agreement was Rs. 20 lakhs per gunta, which of course is denied by PW1. But, there is no evidence on record to establish that the value of the subject property was more than Rs.20 lakhs per gunta, or that the value was much higher than the value mentioned in the agreement. On the 52 other hand, PW.1 has not denied that the subject property is located in one of the posh areas of the city of Belgaum. The plaintiffs are developers. The defendant has admitted receipt of Rs. 5 lakhs as advance part of the sale consideration, and though it is contended that the subject property was agreed to be sold for certain necessities, there is no evidence that the subject property was put up for sale immediately after the receipt of the legal notice dated 23.6.2007 or any time immediately thereafter. The agreement is executed in the month of December 2006, which is almost 13 years back. In the light of these circumstances, this Court is of the considered opinion that the balance of equities would be in granting specific performance of the Agreement subject to the condition that the plaintiffs shall pay a total sale consideration of Rs. 70 lakhs as against the total agreed consideration of Rs. 32 lakhs. 53
44. For the foregoing, the following:
ORDER
a) The appeal is allowed in part, and the judgement and decree dated 19.1.2013 in O.S. No.6/2010 on the file of the I Additional Senior Civil Judge, Belgaum is set aside.
b) The appellants' suit for specific performance in OS No. 6/2010 is decreed but subject to the condition that the appellants shall pay to the respondent a total sale consideration of Rs.70 lakhs, including the amount of Rs.5 lakhs already paid.
c) The appellants shall deposit with the
1st Additional Senior Civil Judge,
Belgaum the balance sale
consideration of Rs.65 lakhs within a
period of 90 days from the date of
receipt of certified copy of this
judgement.
54
d) The respondent is directed to execute the sale deed for the suit schedule property in favour of the appellants at the cost of the appellants as regards the stamp duty/registration fee and other expenses, and the respondent shall be entitled to withdraw the amount deposited by the appellants in terms of this judgement.
The office is directed to draw the decree accordingly. No costs.
Sd/-
JUDGE Sd/-
JUDGE SA* Ct:sr