Calcutta High Court
Ceean International Private Limited ... vs Ashok Surana And Anr. on 27 August, 2002
Equivalent citations: AIR2003CAL263, (2003)2CALLT322(HC), AIR 2003 CALCUTTA 263, (2002) 4 ICC 597 (2003) 2 CALLT 322, (2003) 2 CALLT 322
Author: D.K. Seth
Bench: Dilip Kumar Seth
JUDGMENT D.K. Seth, J.
1. Preliminary These appeals are directed against the Judgment and decree dated 31st August 1999 passed by the learned Civil Judge, Senior Division, 8th Court, Alipore in a suit for specific performance of contract for sale being in Title Suit No. 33 of 1995. Against the said decree, defendant No. 1, vendor, has filed F.A. No. 14 of 2000, while the defendant No. 2, subsequent purchaser, has preferred F.A. No. 13 of 2000. Both these appeals, by consent of the parties, have been heard together. We propose to dispose of both the appeals involving common question of fact and law, by a common judgment.
1.2. The plaintiff had succeeded in obtaining the decree of specific performance of the contract for sale of 1/7th share of the defendant No. 1 in the suit property. The said 1/7th share, however, was purchased by M/s. Ceean International Private Limited, appellant, in F.A. No. 13 of 2000 during the pendency of the suit.
Submission on behalf of the appellant in F.A. 13 of 2000:
2. Mr. Sudhis Dasgupta appearing with Mr. Bagchi and Mr. Sanjoy Jain, relying upon the various facts and materials on record contended that it was the liability of the plaintiff to redeem the share of the defendant No. 1 from the mortgage with LIC and also to purchase the property subject to the encumbrances referred to in the agreement. From the records, it was clear that the plaintiff was not ready and willing throughout to perform the essential part of the contract, which was to be performed by him.
2.1. Referring to the amount due on account of the mortgage, he had pointed out that in order to avoid accrual of further interest, the defendant No. 1 intended to sell the property at the earliest. In that view of the matter, time was made essence of the contract, which has not been adhered to by the plaintiff.
2.2. According to him, in order to obtain decree for specific performance in view of Section 16 of the Specific Relief Act (SR Act), the readiness and willingness throughout is to be proved. If there is any lapse or intervening period, no specific performance can be granted. He had relied upon the decision in Mst. Sahida Bibi v. Sk. Golam Muhammad, to support his contention and also on Manik Chandra Bhowmik v. Abhoy Charan Gope, AIR 1917 Calcutta 283; His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar, ; and P.R. Deb and Associates v. Sunanda Roy, , in order to explain the meaning of readiness and willingness.
2.3. He contended further that time was essence of contract is to be gathered from the surrounding circumstances and the conduct of the parties. At the same time, the readiness and willingness is also to be ascertained from the surrounding circumstances as well as conduct of the parties. In support of his contention with regard to time as essence of contract, Mr. Dasgupta relied on Chand Rani v. Kamal Rani, .
2.4. He further contended that the defendant No. 1. as subsequent purchaser, was not entitled to contest the suit with regard to the readiness and willingness of the plaintiff in view of the law governing the field when the suit was decreed. Therefore, the defendant No. 2 could not adduce any evidence nor could examine any witness. Neither it could have cross-examined the witnesses of the plaintiff. According to him, the cross-examination relates to the defence of the defendants. As such, if the defence with regard to the absence of readiness and willingness and the plaintiff, is unavailable to the defendant No. 2, it could not have cross-examined the plaintiff's witnesses. Inasmuch as, such cross-examination would be in aid of its such unavailable defence. In support Mr. Dasgupta had relied on K. Venkataramiah v. A. Seetharama Reddy and Ors., .
2.5. Relying on Section 20 of the SR Act, Mr. Dasgupta contended that the decree for specific performance is a discretionary power of the Court. According to him, the facts and circumstances of this case are such that such discretion should have been exercised by the Court instead of granting a decree for specific performance. In support he had relied on K.S. Vidyanandam and Ors. v. Vairavan, .
Submission on behalf of the appellant in F.A. 14 of 20QO:
3. Mr. S.P. Roychowdhury, learned counsel appearing on behalf of the defendant No. 1, being the appellant in F.A. No. 14 of 2000 had supported Mr. Dasgupta. He had led us through various clauses of the agreement and had pointed out to the absence of readiness and willingness on the part of the plaintiff. He had reiterated the contention of Mr. Dasgupta to the extent that the plaintiff had been insisting upon performance at variance of the contract. He had also relied on the same decisions on which Mr. Dasgupta had relied.
3.1. In his deposition, the plaintiff himself had admitted that time was essence of the contract. But the plaintiff did not take any step despite being asked for by the defendant No. 1 through his letter. Unless a draft conveyancers handed over, the clearance under Section 230A of the Income Tax Act could not be obtained and that the plaintiff had refused to deliver the draft conveyance. He pointed out that in terms of Section 55 of the Contract Act, if a particular time is stipulated for performance of a particular term of a contract and if such part of the contract is not performed within such time, the contract becomes voidable at the option of the promise. In this case, according to him, the defendant is the promisee, while the plaintiff was a promisor, who promised to purchase the property on the terms and conditions stipulated in the agreement.
3.2. Relying on Section 20 of the SR Act, he pointed out that the decree for the specific performance is discretionary. In the present case, the defendant No. 2 had purchased 5/7th share of the property after having got the mortgage released. As such the Court could not grant a decree for specific performance. Mr. Roychowdhury had relied upon the decision in K. Venkataramiah v. A. Seetharama Reddy and Ors., and Ganesh Shet v. Dr. C.S.G.K. Setty and Ors., 1998(1) WBLR 303 (SC) (para 12 and 13) in support of his contention in addition to the decisions cited by Mr. Dasgupta. Therefore, the decree appealed against should be reversed and the suit for specific performance should be dismissed.
Submission on behalf of the Respondent:
4. Mr. Bachawat, learned counsel for the defendant/respondent in both the appeals, had pointed out that the plaintiff had already performed the essential part of the contract and was always ready and willing. The plaintiff had approached the LIC, which had declined part redemption. Under the agreement, only 1/7th share of the defendant was required to be redeemed. His liability was confined to a sum of Rs. 70,000/- towards redemption of the mortgage. The agreement clearly stipulated that the plaintiff will purchase the property free from all encumbrances. It was the responsibility of the defendant No. 1 to get the property redeemed from mortgage. Therefore, until the mortgage is redeemed, even though time is made essence of the contract, but the time could neither run nor could be exhausted until the defendant No. 1 could get the property redeemed from mortgage. The plaintiff had never insisted upon performance at variance of the contract. He relied on A.E.G. Carapiet v. A.Y. Derderian, and L.C. Golak Nath and Ors. v. State of Punjab and Anr., . He has also relied on Section 16 of the SR Act.
4.1. Mr. Bachawat contended that in respect of specific performance of a contract for sale of immovable property, time cannot be the essence of the contract. In the present case, from the surrounding circumstances and the conduct of the parties, it appears that the time was never made essence of the contract. Inasmuch as, at one place three months was stipulated and in another place six months was stipulated. In any event, the essence of time is dependent on the redemption of the mortgage. If it takes a longer time, the principle of essence of time cannot be adhered to and implemented.
4.2. He had distinguished all the decisions cited by Mr. Dasgupta and Mr. Roychowdhury respectively. He pointed out that the defendant No. 2 is not entitled to agitate this point of readiness and willingness of the plaintiff since it had never contested the suit on those grounds. It had also not cross-examined the witnesses of the plaintiff. Therefore, it is precluded from assailing the same on those grounds. He further points out that when the suit was decided, the decision in Jugraj Singh and Anr. v. Labh Singh and Ors., was governing the field. This decision precluded a purchaser from challenging the readiness and willingness of the plaintiff. Therefore, even in appeal, this question is to be decided on the basis of the law that prevailed at that point of time. The action undertaken at that point of time becomes final. It cannot be assailed or resisted in view of any subsequent change in judicial pronouncement. In support, he relied on L.C. Golak Nath and Ors. v. State of Punjab and Anr., .
4.3. He contended further that the facts and circumstances of the case are as such that there is no scope for exercising discretion by the Court, since the defendant No. 1 himself had failed and neglected to perform his part of the contract and had sold the property during the pendency of the suit. Therefore, the defendant No. 1 cannot claim to invoke the discretionary power of the Court, particularly, when he has parted with possession and sold the property to someone else. Similarly, the defendant No. 2, a post-suit purchaser, is hit by the doctrine of lis pendence.
Application for additional evidence by defendant No. 2:
5. Mr. Dasgupta had filed an application under Order 41 Rule 27 CPC for adducing additional evidence. He had contended that though these documents, which are mostly orders of Courts or such documents, which need not be proved, were in his possession, but he could not adduce the same before the Trial Court because of the decision in Jugraj Singh (supra), by reason whereof the defendant No. 2 was precluded from contesting the absence of readiness and willingness of the plaintiff. But, when the position has changed by reason of the decision in Ram Awadh (dead) by LRS and Ors. v. Achhaibar Dubey and Anr., ; the defendant No. 2 was advised to file these documents. According to him, all these documents are relevant for the purpose of deciding the issues involved in the appeal. According to him, these documents are necessary even on the ground of other substantial reasons and that the Court needs those documents to pronounce a judgment in the appeal having regard to the subsequent events.
Objection of the Respondent:
6. Mr. Bachawat, however, contended that some of these documents were pre-suit documents and some were pre-hearing documents. These documents could have been produced or attempted to be produced in the trial Court. The plaintiff having not attempted in the trial Court, it cannot avail of the benefit of Order 41 Rule 27 CPC. According to him, the grounds spelt out in the application for additional evidence is wholly misplaced and misconceived. He further contends that none of those documents are relevant for the purpose of this appeal. None of these documents could have any bearing either with regard to the readiness and willingness of the plaintiff or with regard to the question that time was essence of the contract or otherwise. Therefore, the application for additional evidence should be dismissed with costs.
Facts:
7. Before we address ourselves on the respective questions raised by the learned counsel for the respective parties, we may refer to the relevant facts in order to appreciate the question involved herein. From the materials on record including those sought to be adduced as additional evidence, the facts may be summarised as hereafter.
7.1. The property originally belonged to one Satya Prasanna Basu, father of the defendant No. 1. The said Satya Prasanna Basu mortgaged the property with Hindustan Insurance Company on 31st May 1948. On 29th of October, 1960, Satya Prasanna died intestate leaving behind several heirs including defendant No. 1, who, admittedly, inherited 1/7th share in the property. In 1963, LIC filed a mortgage suit being the Title Suit No. 53, of 1963 before the subordinate Judge, 3rd Court, Alipore for realisation for the mortgage dues then outstanding amounting to Rs. 60,000/-approximately. On 19th of June 1967, a consent decree for Rs. 59,715.81 was passed in a preliminary form with interest @ 7% per annum with quarterly rests against the defendants in the said suit.
7.2. Subsequently, final mortgage decree was passed. The property was put to sale. One Rameswar Singh purchased the property in auction. On 6th May, 1987, an application for setting aside the mortgage decree was filed on the ground that the defendant No. 4 in the said mortgage suit was of unsound mind. On the other hand, LIC prayed for confirmation of sale. On 6th May, 1987, the prayer for setting aside the decree was rejected by the Executing Court by an order of the same date passed in Title Execution Case No. 9 of 1972. The application for confirmation of sale was also rejected on the same date. LIC filed F.M.A. 17 of 1988 against the said order refusing confirmation of sale.
7.3. On 28th March, 1994. the defendant No. 1 entered into an agreement for sale with the plaintiff in respect of his 1/7th share in the suit property. On being approached, the LIC on 19th April, 1994 declined part redemption and informed that a sum of Rs. 5,12,040.72 was due on account of the mortgage decree. On 6th May. 1994, the defendant No. 1 by its letter (Exhibit B) asked the plaintiff to send the draft conveyance for obtaining Income Tax Clearance Certificate. In reply, the plaintiff through his letter dated 31st May, 1994 (Exhibit 3) asked the defendant No. 1 to get the property freed from encumbrance by redeeming the mortgage from LIC. The defendant No. 1 in his reply dated 11th June 1994 (Exhibit 'B-1') informed the plaintiff that the plaintiff was satisfied about the title of the defendant No. 1 and it was the plaintiff, who was to pay to LIC a sum of Rs. 70,000/-. On 20th of June 1994, the plaintiff through its letter (Exhibit 4) asked the defendant No. 1 to make out a good and marketable title.
7.4. On 28th of February, 1995, in the said appeal being F.M.A. No. 17 of 1988 dated 6th May 1987 rejecting the LIC's application for the confirmation of the sale filed by LIC, this Court had directed the defendant No. 1 to liquidate the entire dues of LIC including interest within one month. On 7th March 1995, a banker's cheque Rs. 5,40,366.84 in the name of LIC was issued at the instance of the defendant No. 2. This was forwarded to LIC by the defendant No. 1 in terms of the order of the Court on 10th of March 1995. The LIC accepted the cheque against the mortgage decree in terms of the order of this Court on 14th of March 1995 on which date LIC granted receipt to the defendant No. 1.
7.5. On this 14th of March 1995, the plaintiff filed Title Suit No. 90 of 1995 before the learned Munsif, 3rd Court, Alipore against the defendant No. 1 for a declaration and permanent injunction restraining him from transferring the property. This suit, however, was dismissed for default in 1997. On 28th April 1995, the present suit was filed. On 19th of June 1995, the defendant No. 1 sold his right, title and interest in the property to the defendant No. 2, appellant. The defendant No. 2 had purchased 3/7th share by negotiation and 2/7th share by virtue of decrees passed in Title Suit No. 146 of 1995 and Title Suit No. 147 of 1995.
7.6. Subsequently, on 12th of September 1997. this Court modified the order dated 6th May 1987 of the Trial Court to the extent that if a sum of Rs. 1,50,000/- is paid to the auction purchaser, the matter would stand remitted to the Executing Court and in default, the auction sale would stand confirmed. The auction purchaser was given liberty to withdraw the said amount. On 26th September, 1997, the said sum of Rs. 1,50,000/-wad deposited in Title Execution Case No. 9 of 1972. Ultimately, on 31st of August 1999, the suit for specific performance filed by the plaintiff was decreed. Against this decree, the defendant No. 1 had preferred F.A. No. 14 of 2000, while the defendant No. 2 had preferred F.A. No. 13 of 2000.
Whether the application under Order 41 Rule 27 CPC should be allowed:
8. The defendant No. 2, appellant, has filed an application under Order 41 Rule 27 CPC. The documents sought to be adduced as additional evidence have been made part of the application. From the said application, it appears that most of the documents related to records of the Court and certain registered documents, receipts and challans in connection with the various suits and execution cases relating to the property. Some of those documents are pre-suit, some are pre-hearing and a few are post decree. Admittedly, majority of these documents were in custody and power of the defendant No. 2. But it had not attempted to adduce the same in evidence.
8.1. But the facts remain that until the decree was passed, the law was governed by the decision in Jugraj Singh (supra), by reason whereof the defendant No. 2 could not contest the suit on the question of absence of readiness and willingness of the plaintiff. Be that as it may, from a perusal of these documents, it appears that these documents are relevant for the purpose of proving either the readiness and willingness of the plaintiff or with regard to the question that time was essence of the contract. But to our mind, it appears that these documents might have important bearing with regard to the exercise of discretion by the Court, as contemplated under Section 20 SR Act.
8.2. Order 41 Rule 27 CPC permits additional evidence in appeal on the grounds available thereunder. Under Order 41 Rule 27 CPC, additional evidence is admissible if a party despite exercise of due diligence is unable to produce such evidence at the time of passing the decree or where the Appellate Court requires the document to be produced in order to enable it to pronounce judgment or for any other substantial cause. In the present case as discussed above, the defendant No. 2 could not produce evidence in view of the judgment in Jugraj Singh (supra). Now that the law has since changed, the case of the defendant No. 2 may come within the purview of Clause (aa) of Rule 27 Sub-rule (1) of Order 41 CPC.
8.3. At the same time, Section 20 SR Act makes the Court's power to grant specific performance discretionary guided by certain judicial principles as provided in Sub-section (2) thereof. In order to exercise such decision, if it appears to the Court that production of certain documents are required for the purpose of pronouncing judgment, the Appellate Court may resort to Clause (b) of Order 41 Rule 27(1) CPC. Under Section 20(2) SR Act, Court has to consider whether such grant would allow an unfair advantages to the plaintiff over the defendant or whether such grant could involve some hardship on the defendant, which the defendant did not foresee whereas it's non-performance would not involve such hardship on the plaintiff or where there are circumstances to make specific performance unequitable.
8.4. In such a case, if such application is made and such documents are produced and leave is sought for then it is a bounden duty of the Court to examine the said documents and arrive at a conclusion as to whether the Court would require such documents for pronouncing judgment having regard to the discretion cast upon it by statute. Having examined the documents as discussed above, we are of the view that these documents would have some bearing on the exercise of the discretion conferred upon the Court under Section 20 SR Act. That the Court do possesses such power is by now a well-settled proposition. We may. refer to few such decisions, one of which is Arjun Singh v. Kartar Singh, and Syed Abdul v. Remi Reddi, . Having regard to the evidence sought to be adduced, it appears that those have a direct and important bearing on the main issue in the case as to whether the discretion under Section 20 SR Act is to be exercised or not.
8.5. In the present case, these documents may be acceped either under Clause (aa) of Section 20(1) SR Act or under Clause (b) the substantial cause Clause or necessity of the Court clause. Having regard to the facts and circumstances of the case and, particularly, the facts borne out on record and these documents, it appears that these documents would be relevant and necessary and have important bearing on the issues for the purpose of adjudicating the present appeal.
8.6. In order to oppose admission of the additional evidence, Mr. Bachawat had relied on Smt. Ashalata Mitter v. Amiga Kumar Dey and Ors., . In the said case, it was held that it is not the intention of the legislature to allow admission of document as additional evidence at the appellate stage. The reception of such documents at that stage would have led to a formal proof of the documents themselves and an opportunity would have to be given to the appellant to adduce evidence in rebuttal but that was neither possible nor desirable.
8.7. But Mr. Bachawat has not been able to point out from any of the documents for which a formal proof would be necessary or for which there could be no possibility of rebuttal. Inasmuch as, majority of these documents are related to the certified copies of the orders passed by different Courts and challans issued by Courts. Copy of the application for additional evidence was served upon the Advocate-on-Record for the respondent long ago. No opposition to the same, however, has since been filed. Even at the time of hearing, genuineness or veracity of any of these documents, copies whereof have been annexed, has since assailed by Mr. Bachawat. The other documents, which are not Court records, do find support from the Court records. Inasmuch as, the Court permitted deposit of the dues of LIC within a particular date and it was so deposited through Banker's cheque. Upon receipt thereof, LIC had issued its receipt. A further order was obtained for deposit of a sum of Rs. 1,50,000/- as Interest or compensation payable to the auction purchaser. The auction purchaser was allowed to withdraw the above amount as well as the amount deposited by him. Pursuant to such order, the sum of Rs. 1,50,000/- was deposited within the time stipulated. Thus, having regard to the facts and circumstances of this case, the ratio decided in Ashalata (supra) cannot be attracted.
8.8. Mr. Bachawat had also relied on Sobharam Tikaram and Ors. v. Rajkumar Munnalal and Ors., . In the said case, it was held that the reception of additional evidence at appellate stage by the Court depends on the test as to whether the Appellate Court is able to pronounce judgment on the material before It without taking into consideration the additional evidence sought to be adduced. Such discretion is not arbitrary but is a judicial one circumscribed by the limitation specified in the rule and that it can be accepted when, on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not discovery of fresh evidence. Any other substantial cause confers a wide discretion in the Appellate Court. It might require a fresh trial unless the documents sought to be produced are conclusive and free from suspicion. This decision rather helps the appellant not the respondent having regard to the facts and circumstances of this case.
8.9. He also relied on Shiv Chander Kapoor v. Amar Bose, . But the ratio decided therein has no manner of application in the present case. Inasmuch as, additional evidence was rejected on the ground that no attempt was made to produce such evidence in the High Court nor even before the Supreme Court till conclusion of hearing before the Supreme Court. Such is not the situation in the present case.
8.10 In these circumstances, the application for additional evidence is hereby allowed and the said documents' genuineness and veracity whereof has not been questioned by Mr. Bachawat, copies whereof are already furnished to him, are admitted into evidence in F.A. No. 13 of 2000.
Can defendant No. 2 contest the case on the question of readiness and willingness?:
9. Admittedly, the defendant No. 2 did not adduce any evidence on the question of readiness and willingness or otherwise in the suit, though it had entered appearance and filed written statement. Neither it had cross-examined the plaintiff's witness on any of those questions. However, the learned counsel for the defendant No. 2 had argued the case on the basis of the materials available. The suit was decreed on contest as against the defendant No. 2 as well. In this background, the question relating to the right of the defendant No. 2 to contest the case on any of those questions is to be examined. In Jugfaj Singh (supra), by two Judges Bench, it was held that the plaintiff was not ready and willing to perform his part of the contract is specially available to the vendor/defendant. It is personal to him. The subsequent purchasers have got only the right to defend their purchase on the premise that they have no prior knowledge of the agreement for sale with the plaintiff. They are bona fide purchaser for valuable consideration. Though, they are necessary parties to the suit, since any decree obtained by the plaintiff would be binding on the subsequent purchasers, the plea that the plaintiff must always be ready and willing to perform his part of the contract is available only to the vendor or his legal representatives, but not to the subsequent purchasers. Admittedly, this, was the law that governed the filed till the decree in the instant suit was passed, namely, on 31st August 1999. Therefore, the defendant No. 2 was not entitled to contest the suit on any of these questions. But defendant No. 2 was a necessary party to the suit as subsequent purchaser and was so made a party to the suit and the decree is binding on it. It has preferred the appeal, which is now being heard.
9.1. Subsequent to the decree but before this appeal is taken up for hearing the law has since changed. The Apex Court in the three Judge Bench in Ram Awadh (dead) by LRS and Ors. v. Achhaibar Dubey and Anr., , the decision in Jugraj Singh (supra) was held to be erroneous and was overruled. In the said decision, it was held that the obligation imposed by Section 16 SR Act is upon the Court not to grant specific performance to a plaintiff, who has not met the requirements of Clause (a), (b) and (c) thereof. A Court, therefore, must not grant relief to a plaintiff, who has failed to aver and to prove that he has performed or has always been ready and willing to perform his part of the agreement, the specific performance whereof he seeks. There is, therefore, no question of the plea being available to one defendant and not to another. It is open to any defendant to contend and establish that the mandatory requirement of Section 16(c) has not been complied with. It is for the Court to determine whether it has or has not been complied with. Depending upon its conclusion, the Court may decree or decline to decree the suit.
9.2. An appeal is a continuation of a proceeding. It is a settled proposition of law (Vijay Nath v. Damodar Das, ). It is a continuation of the proceeding of the original Court and is in the nature of rehearing (Damodar Mukherjee and Ors. v. Bonwarilal Agarwalla and Ors., ; Dayawati v. Inderjit, ). Therefore, at the time of hearing of the appeal, all rights available to a party in the suit would be equally available in the appeal. The fact that on account of a particular proposition of law then governing the field, a right, which might not have been available during the course of the suit, can become available, if the law changes before the appeal is decided. A proceeding is to be decided on the basis of law that governs the field on the date when the decision is arrived at. Therefore, even if such right was not available to a party when the suit was decreed, such party cannot be precluded from available of such right, which is now available by reason of changed law, in the appeal. Such a question arose in Chowdhury Rohini Kumar Mullick v. State of West Bengal and Anr. (F.M.A. No. 334 of 1990) disposed of on 12th of July 2002. In the said decision we had occasion to deal with this question relying on the decision in Lakshmi Narayan Guin v. Niranjan Modak, . The said decision had followed the decision on this principle in Ram Sarup v. Munshi, , followed in Mula v. Godhu, and Dayawatt (supra), while quoting from . In Lakshmi Narayan (supra), the Apex Court had relied upon Amarjit Kaur v. Pritam Singh, ; Kristnama Charter v. Mangammal, (1902) ILR 26 Mad 91 (FB) as well as Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri .
9.3. Mr. Bachawat, on the other hand, sought to contend that the changed law has no retrospective application. As such the appellant cannot take advantage of the decision in Ram Awadh (supra). He relied on L.C. Golak Nath and Ors. v. State of Punjab and Ors., . But that principle has no manner of application in a case where the order has not reached finality. Appeal is a continuation of proceedings, the judgment and decree is subject to appeal and has not reached finality. Therefore, no right appears to have been vested in the plaintiff in order to attract the mischief of affecting vested right.
9.4. Therefore, the changed law would govern the field. Under the changed law, the defendant No. 2 is equally entitled to resist the decree on all points available to defendant No. 1.
Can a party in appeal contest an issue not contested in suit?:
10. It will make no difference in such a case where a party was precluded from contesting the suit on these points/issues on account of being disentitled in law then governing the field. The principle, on which such right is denied to a party in appeal when such party did not contest the suit on particular issue/point, is the principle of estoppel or waiver, as the case may be. Inasmuch, as by not contesting the case on those points, it is deemed that such party had waived his known rights. Once a party has waived his rights or has failed to avail of such rights or espouse such rights, he is estopped from raising such rights in appeal, unless he is able to show that for sufficient reasons he was prevented from raising such points or availing of such rights. In the present case, it was the law that precluded him and it is the law that enables him now. Therefore, this was a reason sufficient to prevent him from agitating those points in the suit. The waiver is giving up of a known right. Here it was not a question that the defendant No. 2 had given up its known right. Therefore, the principle of waiver cannot be attracted in this case. The principle of estoppel can also not be attracted. Therefore, the defendant No. 2 despite having not contested the suit on these points, in view of the changed law, it is now entitled to contest the case on all points, as has been held in Ram Awadh (supra).
10.1. Mr. Bachawat had relied on Vidhyadhar v. Mankikrao and Anr., . In the said decision, it was held that a party to the suit does not appear into the witness box and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct. Thus, the defendant No. 2 having not participated in the proceedings cannot now agitate those points since it is to be presumed that he had admitted the case of the plaintiff. But, this decision does not help him at all in view of the law as then prevailed on the basis of the decision in Jugraj Singh (supra).
10.2. We are unable to persuade ourselves to agree with the contention of Mr. Bachawat. Mr. Bachawat had relied upon the decision in A.E.G. Carapiet v. A.Y. Derderian, to contend that when a party has declined to avail himself of the opportunity to put his essential and material case in cross-examination, it must follow that he believed that the testimony given would not be disputed at all. It is wrong to think that this is merely a technical rule of evidence. It is a rule of essential justice. It serves to prevent surprise at trial and miscarriage of justice, because it gives notice to the other side of the actual case that is going to be made when the turn of the party on whose behalf the cross-examination is being made, comes to give and lead evidence by producing witnesses. But this decision does no help us in the present case where the defendant No. 2 could not cross-examine because of the law prevailing at that point of time. Mr. Bachawat had also sought to contend that the defendant No. 2 could have cross-examined the witnesses, but Mr, Dasgupta relied on K. Venkataramiah v. A. Seetharama Reddy and Ors., in order to contend that no such cross-examination would be permissible since it would touch his defence which the defendant No. 2 was not permitted to defend in view of the law then prevailing.
Defendant. No. 2 transferee for value without notice: Lis pendence:
11. The ground that the defendant No. 2 was a bona fide transferee for value without notice cannot be available in the facts and circumstances of this case. This principle would have been applicable to him as provided in Section 19(b) SR Act if the transfer was a pre-suit transfer. Admittedly, the transfer was effected on 19th June 1995. Whereas the present suit was filed on 28th of April 1995. Therefore, this transfer is hit by the principles of (is pendence provided in Section 52 of the Transfer of Property Act, 1882. The principle of lis pendence is excluded in a suit or proceeding which is collusive and where the right to immovable property is not directly and specifically in question. This case does not come under any of the two exceptions. Therefore, the benefit of Section 19(b) of the SR Act is not available to the defendant No. 2 in this case.
Section 16 of the SR Act:
12. Section 16 SR Act provided that a specific performance of a contract cannot be enforced in favour of a person (b) who has become incapable of performing or violates any essential term of the contract that remains to be performed on his part or willfully acts at variance with or in subversion of the relation intended to be established by the contract, or (c) who fails to aver and prove that he has 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 the terms performance of which has been prevented or waived by the defendant. Clause (c) has since been explained (i) that it is not essential where the contract involves payment of money, to actually tender to the defendant or to deposit in Court except when so directed by the Court; and (ii) the plaintiff must aver performance of readiness and willingness to perform the contract according to its true construction.
12.1. A plain reading of Section 16 SR Act makes it clear that in order to obtain specific performance of a contract, the plaintiff has to show that he has not violated any essential term of the contract that on his part remains to be performed or that he has not acted willfully at variance with or in subversion of the relation intended to be established by the contract and that he has averred and proved that he has performed and was always ready and willing to perform the essential terms of the contract to be performed by him unless prevented or waived by the defendant. The ingredients may be specified thus: (1) the plaintiff has become incapable of performing any part of the contract that remains to be performed by him; or (2) he has violated any essential term of the contract that remains to be performed by him; or (3) he acts in fraud of the contract; or (4} he willfully acts at variance with the relation intended to be established by the contract; or (5) he willfully acts In subversion of the relation intended to be established by the contract; or (6) he fails to aver that he has performed the essential terms of the contract to be performed by him; or (7) he was always ready and willing to perform the essential terms of the contract to be performed by him; or (8) he was prevented by the defendant from performing any part of the contract; or (9) the defendant had waived performance of any part of the contract; and (10) he has to prove the conditions contained in (6) to (8). According to the explanation, much readiness and willingness to perform the contract must be according to the true construction of the contract.
Was the plaintiff ready and willing?:
13. In this background, now we are to examine whether the plaintiff was ready and willing and was always ready and willing to perform essential part of the contract according to its true construction to be performed by him. Essential terms are those which are absolutely vital to the bargain, a violation whereof will alter the mutual relationship of the parties in such a manner that it would no longer be equitable to decree the specific performance of the contract on the principle of continuation of the mutual relationship as existed at the time when the contract was made (Sellappa Chetty and Ors. v. Marappa Goundar and Ors., ). Whether a particular term in an agreement is essential or not depends upon the construction of the term.
13.1. In this background, we may now analyse what were the essential terms of the contract having regard to the agreement, which is at page 1 part II of this Paper Book. Admittedly, the property was mortgaged to LIC. The suit filed by LIC was decreed. The property was put to sale. It was purchased by the auction purchaser. Application for setting aside the sale was rejected. At the same time, the confirmation of sale was also refused. Against this order of refusal of confirmation of sale, an appeal preferred by LIC being F.M.A. No. 17 of 1988 was pending. The Title Execution Case No. 9 of 1972 for enforcement of the final decree passed in Title Suit No. 53 of 1963 was also pending. The property was sought to be sold free from all encumbrances but subject to the said proceedings and mortgage of LIC and that such representation was relied upon and admitted as true by the purchaser. He agreed to purchase the 1/7th share of the defendant No. 1 in the suit property free from all encumbrances, attachment, trust, charge and/or lis pendence whatsoever but subject to as aforesaid, viz. the mortgage and the pendency of the suit etc. mentioned in the agreement. Thus, one of the essential terms of the contract, according to the true construction of the agreement, is that the plaintiff had agreed to purchase the property free from all encumbrances other than the encumbrance mentioned in the agreement, viz. the mortgage and the resulting suit and decree and the pendency of the appeal of LIC. Therefore, the plaintiff must show that he was ready to perform this essential part of the contract.
13.2. The other essential part of the contract was the time limit provided therein. The transfer was to be completed within three months from the date of the agreement. In default of completing the transaction within six months from the date of execution of the agreement would render the agreement invalid and earnest money forfeited. This was so intended as it can be discovered from the terms of the contract that the defendant No. 1 was eager to get the property sold at the earliest or else there was every likelihood of the auction sale being confirmed. Therefore, the performance within the time stipulated was also an essential part of the terms of the contract.
13.3. The other essential term was that the property is to be redeemed from LIC by the plaintiff/purchaser while restricting his liability towards payment for redemption of the property to LIC at Rs. 70,000/-. If we read the agreement as a whole, it will be clear and unambiguous that this redemption was a part to be performed by the purchaser and not by the vendor and that the limitation of the liability of the purchaser at Rs. 70,000/- indicates that in case the property is not redeemed, the liability of the purchaser was restricted to Rs. 70,000/- and not more. This again goes to show that the agreement was intended for being sold together with the encumbrances of the said mortgage, suit and the decree with LIC and not free from it.
13.4. The next essential part of the contract was to furnish to the defendant No. 1 the draft conveyance in order to obtain clearance from the Income Tax Department under Section 230A(1) of the Income Tax Act.
13.5. These essential terms of the contract can be found from Clause (xi), (xii) and (xxi) of the recital of the agreement and Clause (1), (2), (3), (4), (5), (6) and (8) of the terms and conditions of the agreement. A true construction of the said agreement, as we have understood, requires the fulfillment of the essential terms of the contract as discussed above. The sum total of the discussion is that it was the plaintiff's liability to redeem the property from the mortgage with LIC so far as the 1/7th part intended to be purchased by him. In case it cannot be redeemed, he was liable to purchase together with these encumbrances and his liability was limited to Rs. 70,000/- and as well as subject to the appeal. Inasmuch as, even if the LIC has agreed to part redemption and redeemed the 1/7th share intended to be purchased by the plaintiff still then the question of confirmation of sale was pending in appeal and such transfer being hit by the principle of lis pendence, was subject to the result of the appeal and the execution. If the sale was confirmed and the appeal succeeded the part redemption would have made the transfer subject to the sale so confirmed and being hit by lis pendence, the plaintiff could not have acquired any title. Therefore, there was no question of making the property free from all encumbrances, until the appeal was decided. The plaintiff had agreed to the terms of the contract having notice and knowledge of the said proceedings involved in the mortgage suit of the LIC.
13.6. From the materials on record, it appears that the suit was decreed in 1963 for a sum of Rs. 59,715.81. In 1994, the amount stood at Rs. 5,12,040.72 and in March 1995, the amount became Rs. 5,40,366.84. This gives an idea that how the interest was mounting. From the materials on record and the terms of the agreement providing stipulation of time making the same essence of contract, it is clearly apparent that the vendor was eager to sell the property at the earliest within a reasonable time or else the interest would go on mounting and the auction sale was likely to be confirmed. Therefore, these were the factors, which has driven the vendor to enter into the contract in order to get rid of the liability of the mortgage with LIC and also to avoid the confirmation of auction sale, which they had unsuccessfully attempted to set aside.
13.7. The defendant No. 1 through his letter dated 6th May, 1994, being Exhibit 'B', requested the plaintiff to forward the draft conveyance in order to enable him to obtain clearance from the Income Tax Department under Section 230A(1) of the Income Tax Act. In reply, the plaintiff in his letter dated 31st May, 1994 (Exhibit 3) pointed out that the defendant No. 1 should make out a good and marketable title to his satisfaction in respect of the 1/7th share of the defendant No. 1 free from all encumbrances, lispendence, trust, charge and/or attachment whatsoever subject to what was stated in the said agreement and that the defendant No. 1 had failed and neglected to make out a good and marketable title in respect of the said property and to get the mortgage of LIC released in respect thereof. Therefore, there was no question of sending the draft deed of conveyance. In the said letter, he had insisted that the defendant No. 1 was to make out a good and marketable title to the satisfaction of the plaintiff in terms of the agreement and that he was not obliged to send the draft conveyance neither the defendant No. 1 was obliged to obtain the Income Tax Clearance. The defendant No. 1 in his reply dated 11th June 1994 (Exhibit 'B-1') again requested the plaintiff to hand over the draft conveyance within 7 (seven) days in order to enable him to obtain Income Tax Clearance and that the property was intended to be sold on condition 'as is where is' basis and the plaintiff had agreed to pay the vendor's share of the liability to LIC. It appears from condition 8 of the agreement that the 1/7th share was intended to be sold in 'as it is' condition and that the time was the essence of the contract, the plaintiff was asked to pay the full amount and complete the transaction. The plaintiff in his reply dated 29th June 1994 (Exhibit 4) reiterated the statements made in Exhibit 3 and once again requested the defendant No. 1 to make out good and marketable title to his satisfaction in terms of the agreement.
13.8. These correspondences show that the defendant No. 1 was ready and willing to perform his part of the contract, whereas the plaintiff was not ready and willing to perform the essential terms of the contract to be performed by him. Inasmuch as, he had agreed to purchase the 1/7th share in 'as it is' condition (clause 8 of the agreement, page 14, part II of the Paper Book). The condition of the property was mentioned in the recital, particularly, Clause (xi), (xii) and (xxi) which specifically made it clear that it was subject to the mortgage and suit and the appeal of LIC therein and that the sale was subject to those encumbrances. The property was treated to be free from all encumbrances except those mentioned in those clauses. These essential terms have since been repeated more than once in various clauses and terms and conditions of the agreement. Virtually, it was repeated in each clause dealing with a particular condition.
13.9. In condition No. 1, the plaintiff was to redeem the property from the mortgage of LIC, limiting its liability to the extent of Rs. 70,000/-. The plaintiff was also given liberty to negotiate with the tenants and obtain possession of the property even before the transaction is complete. There is nothing to show that the plaintiff had ever attempted to negotiate with the tenants or obtained possession as provided in condition No. 7. The time was made essence of contract and that the 3 (three) months was repeated more than once and it had further provided a 6 (six) months limit for cancellation or forfeiture of the contract. The plaintiff was not ready and willing to redeem the mortgage. But that could not have been done by him since part redemption was subject to the agreement of LIC, a third party to the contract. LIC declined part redemption of the mortgage. Therefore, non-compliance of redemption by the plaintiff would not make him disentitled to obtain specific performance of the contract. But, he cannot insist that the property should be made free from the mortgage when he had agreed to purchase the property on 'as it is' condition subject to the encumbrance mentioned in different clauses, namely, that the property is free from all encumbrances etc. but subject to the mortgage with LIC and the pendency of the execution case and the appeal as disclosed in the agreement.
13.10. Therefore, the essential part of the contract to be performed by the plaintiff was to complete the transaction and purchase the property with the encumbrances of the mortgage, the suit, the execution and the appeal respectively as mentioned in the agreement on 'as it is' condition. However, his liability towards LIC was limited to Rs. 70,000/-. But the plaintiff made it clear that he was not willing to purchase the property until a good and marketable title is made out, viz. until the property is redeemed from the mortgage and freed from the suit, execution and the appeal, as is apparent from the correspondences mentioned above. Therefore, it cannot be said that the plaintiff was ready and willing and had always been ready and willing to perform his part of the contract. He had made it clear that he would not purchase the property until the property is freed from the mortgage, suit etc. Therefore, he cannot seek enforcement of the contract since he had not been able to prove that he was so ready and willing to perform the essential terms of the contract to be performed by him.
13.11. Mr. Bachawat had relied on Ramesh Chandra Chandlok and Anr. v. Chuni Lal Sabharwal, and contended that the ratio decided therein squarely applies in the present case. Inasmuch as, in the present case, the plaintiff had attempted to redeem the 1/7th share of the defendant No. 1 from LIC. But LIC had declined part redemption. He was not obliged to redeem the 1/7th share from LIC. Therefore, this shows that the plaintiff was always ready and willing. But the said decision does not help us in the facts and circumstances of this case. Here the property was agreed to be sold on 'as it is' basis subject to the mortgage of LIC and the resultant suit, decree etc. On the other hand, the plaintiff was insisting upon purchasing the property free from all encumbrances, which was never intended by the parties in terms of the agreement. The liability was cast upon the plaintiff to redeem the 1/7th share from mortgage and the sale was always subject to those encumbrances mentioned therein.
13.12. From the above discussion, it appears that the plaintiff was not ready and willing to perform the essential terms of the contract to be performed by him.
Was there any absence of readiness and willingness on the part of the defendant No. 1?:
14. Similarly, from the above discussion, it further appears that the defendant No. 1 was always ready and willing to perform his part of the contract and that the defendant had never prevented the plaintiff from performing any essential term of the contract to be performed by the plaintiff. Neither defendant No. 1 had waived any of the terms of the contract.
14.1. On the question of readiness and willingness, Mr. Dasgupta had relied on Mst. Sahida Bibi v. Sk. Golam Muhammad, . In the said decision, it was held that one cannot enforce specific performance when he has become incapable of performing or violates any essential term of the contract that on his part remains to be performed, or acts in fraud of contract, or willfully acts at variance with or in subversion of the relation intended to be established by the contract. This relief would also be barred when he fails to aver and prove that he has performed and was always ready and willing to perform the essential terms of the contract, which are to be performed by him, other than those prevented or waived by the defendant. A plaintiff who seeks specific performance of contract has to show, first, that he had performed or was ready and willing to perform the terms of the contract on his part to be then performed, and secondly, that he is ready and willing to do all matters and things on his part thereafter to be done. A default on his part in either of these respects furnishes a ground upon which the action may be resisted. It is true that under explanation (i) to Section 16 SR Act, it is not essential for the plaintiff to actually tender the money to the defendant or deposit in Court any money except when so directed by the Court. Still under explanation (ii) of Section 16 SR Act, the plaintiff must aver her readiness and willingness to perform the contract according to its true construction. In the said decision, reference was made to Pollock and Mulla's Indian Contract and Specific Relief Acts, 9th Edition, at page 855 wherein it was pointed out that Section 16 Clause (b) and (c) together with the explanation merely give effect to the decided cases. Referring to Srish v. Banomali, (1904) ILR 31 Calcutta 584 at page 596 (PC), it was pointed out that the Privy Council dismissed a suit for specific performance as the conduct of the plaintiff was at variance with and amounted to a subversion of the relation intended to be established by the promise. Reference was also made to Manik Chandra Bhowmik v. Abhoy Charan Gope AIR 1917 Calcutta 283 : 24 CLJ 90, which is also relied upon by Mr. Dasgupta in this case.
14.2. In His Holiness Ahcarya Swami Ganesh Dassji v. Sita Ram Thapar, , the meaning of readiness and willingness was explained. In the said decision, it was held that it was a hard fact that the defendant was in dire need of money to celebrate his daughter's marriage on a particular date and the agreement for sale provided for finalisation within 7 (seven) days. Time was, therefore, held to be essence of the contract in the said case. Though, approved draft deed was immediately sent but the purchaser did not file the final draft for obtaining income tax clearance. The plaintiff delayed the execution on one pretext or the other. Therefore, it was held that the plaintiff was not ready and willing to perform his part of the contract. In the said judgment, it was further pointed out that there is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness, it may be meant the capacity of the plaintiff to perform the contract, which includes his financial position to pay the purchase price. In determining willingness to perform his part of the contract, the conduct has to be properly scrutinised. Assuming that he had funds, he has to prove his willingness to perform his part of the contract. This can be ascertained from his conduct. Relying on the facts of the said case, it was found that the plaintiff was not willing to perform his part of the contract. Referring 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 always ready and willing to perform his part of the contract. In P.R. Deb & Associates v. Sunanda Roy, , the Apex Court had held relying on Chand Rani v. Kamal Rani, , a Five Judge Bench of the Apex Court held that time was essence of the contract and having regard to the attending circumstances, it was held that he was not ready and willing to perform his part of the contract.
14.3. Applying the above principles in the present case, we also find that the facts as disclosed on record are sufficient to demonstrate that the plaintiff was not ready and willing nor he was always ready and willing to perform his part of the contract, though there was no absence of readiness and willingness on the part of the defendant No. 1.
Was time essence of contract?:
15. Ordinarily time is not an essence of the contract for specific performance of sale of immovable property. But, when it is specifically incorporated in the terms of the contract, then it has to be gathered from the conduct of the parties and the surrounding circumstances whether time was made essence of the contract. If it is found that it was so made essence of the contract, then what would be the reasonable and proximate time and how far the essence of time can be applied in a particular contract! The answer is to be gathered from the facts of each case. If, there was any urgent need of completing the transaction early on the part of the vendor and he has reflected such urgency in the contract itself and provided for certain time and if it appears that non-adherence to such time would result into inequity in favour of the vendor, then definitely time is to be treated as an essence of the contract. The proximity or the reasonableness of the time is dependent on the facts of each case and it cannot extend beyond a period, which is never intended by the parties, unless the time is extended by consent or by reason of default on the part of the vendor or the transferee, being the defaulting party or on account of prevention of one by the other in performing his part by reason of the other's conduct. The Court has to find out from the conduct of the parties and from the terms of the contract, the attending and surrounding circumstances, the period which is to be excluded for the purpose of assessing the time, which is essence of the contract, in order to ascertain its reasonableness or proximity.
15.1. In this case, the reasonableness and proximity was expressed by specific and clear terms to 6 (six) months on the expiry whereof not only the agreement was to stand cancelled but also the earnest money was to stand forfeited, while the stipulation of time that was made essence of contract has provided 3 (three) months from the date of the agreement. The forfeiture clause itself is an indication of making the time essence of the contract. Having regard to the facts that by passage of time, a decree for a sum of Rs. 59,715.81 increased to Rs. 5,12,040.72 in April 1994 and then Rs. 5,40,366.84 in March 1995, it appears that the vendor was eager to complete the transaction at the earliest so as to get rid of the mounting interest being accumulated further. It further appears that the auction sale was sought to be set aside on behalf of the vendor unsuccessfully and that the confirmation of sale, on being opposed by them, was rejected and against which the appeal by LIC was pending. There was every likelihood of confirmation of the sale and thereby the vendor's attempt to sell the property, subject to the encumbrances as stated in the agreement, would be belied, if there was delay.
15.2. From these attending circumstances, it appears that time was intended to be made essence of the contract and the reasonableness and proximity would be adhered to the time intended by the parties. In the present case, it being mutually agreed for 3 (three) months extendable for another 3 (three) months, i.e., total 6 (six) months, the Court normally ought not to extend it beyond that 6 (six) months. Even if it does so, it cannot extend treble or four times the period originally intended. Even then, if we accept treble, then it would be 9 (nine) months and not beyond. Even then there would be mounting interest and there would have been every likelihood of the sale being confirmed and the right of the vendor being lost forever. Having regard to the facts and circumstances of this case, we are not prepared to extend the time beyond it, namely, 6 (six) months from the date of agreement which is double the period stipulated and was agreed to by the parties mutually.
15.3. But then the essence of time would be relevant if it was shown that the plaintiff was ready and willing, but not otherwise. If it is shown that the plaintiff was not ready and willing, then the question of time being essence would be irrelevant. Inasmuch as, one has to show that he was ready and willing throughout. If there is a lapsed period in between or it can be shown that for sometime in between the plaintiff was not ready and willing, then it cannot be said that he was ready and willing all through. It is apparent that the plaintiff was not ready and willing throughout. Inasmuch as, in April 1994, through Exhibit 3 and 4, he had made it clear that he has not ready and willing to purchase the property with the encumbrances on 'as is where is' basis was agreed by him. Therefore, the time that was essence of the contract stood forfeited or became operative as soon the time for completing the transaction expired or as soon the willingness of the plaintiff ceased, as we find from his conduct, as is apparent from the materials on record.
15.4. In Chand Rani v. Kamal Rani, , the Apex Court had held that it is a well-accepted principle that in case of the sale of immovable property, time is never regarded as essence of contract. In fact, there is a presumption against time being the essence of contract. Under the law of equity, which governs the rights of the parties in the case of specific performance of contract to sell of real estate, law looks not at the letter but at the substance of the agreement. It is to be ascertained whether the terms of the contract named a specific time for completion of the transaction. In substance whether it is intended that it is to be complete within a reasonable time. But such intention to make time the essence of contract must be expressed in unequivocal language. If expressed in writing, the language must be unmistakable. It may also be inferred from the nature of property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulation of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to a sale of immovable property, it would normally be presumed that time was not essence of contract.
15.5. In Jamshed Khadaram Irani v. Burjorji Dhunjibhai, ILR 40 Bom 289, the Judicial Committee of the Privy Council observed that the principle underlying Section 55 of the Contract Act did not differ from those, which obtained under the law of England as regards contracts for sale of land. The Judicial Committee observed that it should take place within a reasonable time. Their Lordships, however, added to the said observation of Lord Cairns in Tilley v. Thomas, (1867)3 Ch App 61 that the special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regard time, of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observance of the time limits prescribed in a fashion, which is unmistakable. The language will have this effect if it plainly excludes the notion that these time limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that lay as its foundation. Prima facie, equity treats the importance of such time-limits as being subordinate to the main purpose of the parties, and it will enjoin specific performance notwithstanding that from the point of view of a Court of law, the contract has not been literally performed.
15.6. In Govind Prasad Chaturvedi v. Hari Dutt Shastri 1997(2) SCC 539, it was held that the intention to treat time as the essence of the contract may be evidenced by circumstances which are sufficiently strong to displace the normal presumption that the contract of sale of land stipulation as to time is not the essence of the contract. In Halsbury's Law of England, Volume 4, page 1179, this was dealt within the following manner, viz. the parties may expressly provide that time is the essence of the contract and where there is provision to determine the contract on a failure to complete by a specified period, the stipulation as to time will be fundamental. Other provisions of the contract may on the construction of the contract preclude and interfere. Even where it is expressly provided that time is the essence of the contract such a stipulation is to be read along with other provisions of the contract. On such construction of the contract, it is to be inferred whether a particular date was intended to be fundamental or where it provided for extension of time or for payment of fine for default. The Apex Court after having analysed various cases had laid down the guideline in the following manner for determining as to whether the time was made essence of the contract, i.e., from the expressed terms of the contract, from the nature of the property, from the surrounding circumstances, namely, the object of making the contract. In P.R. Deb and Associates (supra) also the same stand was affirmed. Relying on Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Karuvila's Son, 1987 Supp SCC 340, the Apex Court had observed that before granting specific performance, the Court should meticulously consider all facts and circumstances. The Court has to take care to see that it is not used as an instrument of oppression to have an unfair advantage.
15.7. Applying the said test in the present case, as discussed, in our view, if we grant specific performance of the contract, then It would be allowing the plaintiff an unfair advantage independent of the contract, inequitable for the defendants.
Section 55 Contract Act:
16. Section 55 Contract Act prescribes that if some part of the contract is to be performed within a particular time and if it Is not performed, then it becomes voidable at the option of the promise if the intention of the parties was that the time should be the essence of the contract. In the present case, it was agreed that the plaintiff would perform the contract within the time stipulated and if he was unable to do it then the vendor/ promisee would be entitled to opt to make the contract voidable.
Section 20 SR Act:
17. Section 20 makes the grant of specific performance of a contract discretionary. The Court is not bound to grant such relief merely because it is lawful to do so. However, such discretion of the Court is not arbitrary but be sound and reasonable guided by Judicial principles and capable of correction by Court of Appeal, The conditions under which the Court may exercise such discretion and may not decree a specific performance, are specified in Clause (a), (b) and (c) of Sub-section 2 of Section 20, which are also explained in explanation (i) and (ii) thereunder. One of the grounds to exercise this discretion is that the plaintiff would get an unfair advantage over the defendant or that the performance would cause hardship on the defendant and non-performance would not cause such hardship on the plaintiff.
17.1. In KS. Vidyanandam and Ors. v. Vairavan, , the Apex Court, in the given circumstances where the period of 6 (six) months was specified for the performance of the contract, observed that 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 the essence of the contract unless specifically provided to that effect. If it is held that any suit for such specific performance if filed within the period of limitation provided in the Limitation Act, in that event, decree is to be passed notwithstanding the time limit stipulated in the agreement, then in such circumstances, it 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. Even where time is not the essence of the contract, the plaintiff must perform his part of the contract within reasonable time. Reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property, While exercising its decision, the Court should also bear in mind that when the parties prescribe certain time-limit for taking steps by one or the other party, it must have some significance and that the said time limit cannot be ignored altogether on the ground that time has not been made the essence of the contract relating to immovable properties. In case of urban properties in India, it is well known that their prices have been going up sharply over the last few decades, particularly, after 1973. Court cannot be too oblivious to the reality. It is not possible to agree with the decision of the Madras High Court if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the Court by. law (S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar, ). The rigor of the rule evolved by Courts that time is not the essence oi the contract in case of immovable properties, evolved in times when prices and values were stable and inflation was unknown, therefore, such rule requires to be relaxed, if not modified, particularly, in the case of urban immovable properties. It is high time the Courts do so.
17.2. In the present case, apart from rising of price, the defendant No. 1 had two difficulties staring on his face, one that the interest was mounting and the other that the confirmation of sale was awaiting, which prevented the defendant No. 1 from wasting time and waiting for an indefinite period. This was the reason why he had intended to sale the property with the stipulation making the agreement subject to the encumbrances referred to therein and to sale the property 'as it is' within the time stipulated and in default of the maximum limit of time, the agreement would stand cancelled and the earnest money would stand forfeited.
17.3. Having regard to the facts and circumstances of this case, the conduct of the parties, the expressed terms used in the agreement, the attending and surrounding circumstances at or before the agreement and the materials on record as discussed above, we are of the view that time was made essence of the contract in the present case and that the plaintiff had failed and neglected to perform his part of the contract within the time stipulated and as such it is a case fit where the discretion under Section 20 of SR Act is to be exercised. Inasmuch as, if the claim of the plaintiff is allowed, in that event, it would allow an undue advantage on the plaintiff.
17.4. Inasmuch as, it appears from the additional evidence produced before this Court that in order to get rid of the mortgage and avoid the confirmation of the sale, the vendor had sold the property along with the other co-sharers to the defendant No. 2 after having redeemed the mortgaged property with the help of the defendant No. 2. It appears that the defendant No. 2 had acquired 5/7th share in the property after paying the entire mortgage dues in respect of a property to LIC as well as a compensation of Rs. 1,50,000/- to the auction purchaser and got the property freed from the mortgage as well as the suit. Thus, the object of sale by the vendor/ defendant No. 1 has since been achieved and fulfilled. In case after the vendor/defendant No. 1 and the defendant No. 2 had put their endeavour and invested their substantial effort as well as money to get the property freed from the mortgage and the suit and appeal and the encumbrances subject to which the property was sought to be sold to the plaintiff, it would be allowing unfair advantage to the plaintiff if only 1/7th share is sold to him. This will provide great hardship on the defendant No. 1, who would be bound to cough up the consideration money received by him from the defendant No. 2 and, at the same time, the plaintiff would take advantage of the effort put in by the defendant No. 2 to get the property freed from encumbrances and that the defendant No. 2 having purchased 5/7th share, the plaintiff would be allowed to purchase 1/7th share reducing his interest to 4/7th while the plaintiff had never shown his interest in respect of the other parts of the property.
17.5. Having gone through the additional evidences produced, we have every reason to hold that it would be inequitable to grant the relief to the plaintiff having regard to the balance of equity in favour of the defendant Nos. 1 and 2 and particularly, the defendant No. 2. Therefore, having regard to the principle relating to Section 20 SR Act, we are of the view that the facts and circumstances of the case are fit for exercising the discretion contemplated under Section 20 of the SR Act guided by sound judicial principles as discussed above.
Conclusion:
18. For all these reasons, it appears that the plaintiff was not ready an willing to perform the essential part of the terms of the contract as observed earlier and that time was essence of the contract and that it would be inequitable to grant the relief of specific performance to the plaintiff in the facts and circumstances of this case and that the defendant No. 1 never prevented the plaintiff from performing the essential part of the terms of the contract or had never waived any of the defendant's right.
Order:
19. In the result, both these appeals succeed. The decree dated 31st August, 1999 passed by the learned Civil Judge, Senior Division, 8th Court, Alipore in Title Suit No. 33 of 1995 for specific performance is hereby set aside. The said Title Suit No. 33 of 1995 be and the same is hereby decreed for damages against the defendant No. 1 directing him to refund the earnest of Rs. 25,000/- together with damages assessed at Rs. 10,000/- and dismissed as against the defendant No. 2. The defendant No. 1 shall deposit the said sum of Rs. 35,000/- in aggregate in the trial Court or pay to the plaintiff by A/c payee demand draft or bankers cheque within two months from this date. In default, the said sum of Rs. 35,000/- will carry interest @ 9% per annum simple till deposit or payment as the case may be.
There will, however, be no order as to costs.
If an urgent xerox certified copy of this order is applied for, the same is to be supplied to the applicant at an early date, subject to compliance of all the required formalities.
J. Banerjee, J.
I agree.