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1976 DIGILAW 186 (KER)

Antony v. Vareed

1976-08-26

V.KHALID

body1976
JUDGMENT V. Khalid, J. 1. These are connected appeals and can be disposed of by a common judgment. S.A. No. 780 of 1972 arises from O.S. No. 67 of 1966, Sub Court, Irinjalakuda. The said suit was filed for specific performance of a compromise filed in O.P. No. 8 of 1959, a proceeding under Act 31 of 1958. The trial court decreed the suit, which was confirmed in appeal. Hence this second appeal. 2. S.A. No. 731 of 1972 arises from O.S. No. 31 of filed for recovery of a building with arrears of rent, on the basis of a lease-deed dated 15th August 1953. The plaintiff in one suit is the defendant in the other suit. The trial court decreed the suit for arrears of rent only. There was an appeal and cross-objection. The appeal was dismissed and the cross-objection was allowed, vacating the decree for arrears of rent. Hence this second appeal. 3. It will be useful to state the facts of the case briefly for a proper appreciation of the questions involved in the two appeals. Reference to parties in this judgment, will be as in O.S. No. 67 of 1966. The suit properties originally belonged to the plaintiff (P.W.1). He executed a document of sale in favour of the defendant (D.W.1). As per this document he purported to sell the properties for a sum of Rs. 7,000. On the same day, the defendant executed a karar in favour of the plaintiff, by which he undertook to re-convey the properties within six years, in case the amount was paid back. This agreement is Ext. P-1. On the same day, two lease-deeds were executed by the plaintiff regarding the wet land and a building comprised in the properties by which he agreed to pay rent to the defendant. 4. According to the plaintiff, the document of sale in effect was only a transaction of debt and he had to execute it at the behest of the defendant. When Act 31 of 1958 came into force, he filed O.P. No. 8 of 1959, claiming the benefits under that Act to treat the transaction as a mortgage. This application was opposed by the defendant, who filed two suits, O.S. No. 93 of 1961 and O.S. No. 94 of 1961 in the Munsiff's Court, for recovery of arrears of rent, due under two lease-deeds. This application was opposed by the defendant, who filed two suits, O.S. No. 93 of 1961 and O.S. No. 94 of 1961 in the Munsiff's Court, for recovery of arrears of rent, due under two lease-deeds. All these matters were compromised on 10th December 1963. Ext. D-3 is the certified copy of the compromise petition. Ext. D-2 is the order of the Court accepting the compromise. The terms of the compromise are important. The plaintiff was to pay a sum of Rs. 8,000 on or before 19th February 1964 to the defendant. On such payment, he was to get back the properties from the defendant. If he fails to do so, the O.P. will stand dismissed and the rent suits will be decreed with costs. The plaintiff paid a sum of Rs. 1,000 into the hands of P.W. 2, the Advocate appearing for the defendant in the O. P. The Advocate agreed to persuade his client to execute the necessary document in conformity with the compromise Ext. D-3. The amount was subsequently returned by the Advocate informing P.W. 1 that his client, namely, P.W. 1 was not willing to accept the amount. A registered notice followed, resulting subsequently in the filing of the two suits, O.S. No. 31 of 1967 and O.S. No. 67 of 1966, from which these two second appeals arise. 5. Against the background of the facts mentioned above, we will have to examine the contentions raised. The first contention raised is that the suit is barred under section 47, C.P.C. This contention would depend upon the question whether the decree passed is one with or without jurisdiction. The appellant's counsel contended that even though a suit or a proceeding related to a restricted cause, a decree passed outside the subject-matter, is not void solely on that ground. In support of this contention, he cited before me a few authorities which considered the expression so far as it relates to the suit, occurring in Order XXIII, Rule 3, C.P.C. 6. In Sat Narain v. Chandra Mohan, A.I.R. 1940 Oudh 27 a Division Bench of the Oudh Court observed that in matters arising under Order XXIII, Rule 3, the test to apply is, as to what is the relief which the court would have granted in that suit, but for the intervention of the compromise between the parties. In Sat Narain v. Chandra Mohan, A.I.R. 1940 Oudh 27 a Division Bench of the Oudh Court observed that in matters arising under Order XXIII, Rule 3, the test to apply is, as to what is the relief which the court would have granted in that suit, but for the intervention of the compromise between the parties. However, it was held that an erroneous exercise of jurisdiction by a court has to be distinguished from a patent want of jurisdiction and if the compromise is within the pecuniary jurisdiction of the court, it cannot be said that the compromise is outside the jurisdiction. 7. In Nanalal Bhooilal v. Ambalal Somnath, A.I.R. 1951 Bombay 426, the court had to deal with the expression 'so far as it relates to the suit'�, occurring in Order XXIII, Rule 3, C.P.C. The learned Judge who decided the case, held that the said expression is wide enough to include even a matter which was extraneous to the suit and which was never in question in the suit itself. In that case, in a suit to enforce a mortgage, the plaintiff impleaded the subsequent mortgagee also as a party, whose mortgage exceeded, the pecuniary jurisdiction of the trail court. The question agitated before the court was whether the compromise decree passed in such a suit could be an executable decree. In that case, the court held that since the suit was on a prior mortgage, the mere adding of the subsequent mortgagee whose mortgage exceeded the pecuniary jurisdiction of the court does not by itself divest the court of its jurisdiction, and a decree passed does not fail for want of jurisdiction and therefore the compromise which was embodied in the decree was held to be a valid decree. 8. In Maharani Devi v. Ram Adhar, A.I.R. 1962 Allahabad 21 a similar question arose and a learned Judge had to consider the expression so far as it relates to the suit. The court was considering a compromise in a suit for money in which the plaintiff surrendered his possession of the land. In the said compromise, the consideration fixed was not beyond the pecuniary jurisdiction of the court. The court was considering a compromise in a suit for money in which the plaintiff surrendered his possession of the land. In the said compromise, the consideration fixed was not beyond the pecuniary jurisdiction of the court. The court held that the compromise in the said suit was valid and the words so far as it relates to the suit should be interested liberally and according to common sense so that the right to compromise is not defeated. 9. In Abdul Shakoor v. Bijai Kumar, A.I.R. 1964 S.C. 874 the suit was on a simple mortgage. The parties filed a memo of compromise incorporating various agreements. The agreements related to reconveying the property included in the mortgage. The Supreme Court held that the decree was executable as there was nothing which was outside the scope of the suit, although some of the terms of the compromise did not strictly come within the scope of a decree that could be passed in a suit on a simple mortgage. 10. In Imbichamamed and another v. Ali, 1960 K.L.J. 1010, in a suit for arrears of rent, a compromise was recorded, whereby the defendants agreed to pay certain amount and to surrender possession of the properties after harvesting the Kanni crop. Since the property was not surrendered in conformity with the terms of the compromise, the 2nd suit was filed which was resisted on the ground that the suit was not maintainable as it was barred by section 47, C.P.C. This Court held that a compromise decree passed in a suit, though relates to a matter extraneous to the suit, is not a nullity or beyond the jurisdiction of the court. The remedy for the party aggrieved by the compromise decree was to file an appeal. It is not open to him to challenge the correctness or otherwise of the decree in execution. It is further observed that the expression 'so far as it relates to the suit' is wide enough and a liberal interpretation should be given to the said expression. 11. Counsel for the respondent contended that the compromise which was incorporated in the order of the court was far outside the scope of the petition filed under Act 31 of 1958 and therefore it is not a decree which could be executed. The contention is, that it did not relate to the scope of this petition. 11. Counsel for the respondent contended that the compromise which was incorporated in the order of the court was far outside the scope of the petition filed under Act 31 of 1958 and therefore it is not a decree which could be executed. The contention is, that it did not relate to the scope of this petition. However much one may strain the expression so far as it relates to the suit, the terms of the compromise cannot be brought within its ambit. The petition was filed under section 11 of Act 31 of 1958. The decree that could be passed by the court is one under section 11 (3). Section 11 (3) reads as follows:” "(3) Along with the application made under sub-section (2), the mortgagor shall pay court, fees as for a suit for redemption oil the balance of the mortgage amount and the court shall put the mortgagor in possession of the property and pass an order allowing the mortgagee to recover by sale of the mortgaged property the said balance amount in ten equal half-yearly instalments together with the interest accrued due on such balance outstanding till the date of payment of each instalment at five per cent per annum, the first instalment being payable within a period of six months from the date on which the mortgagor recovered possession of the property mortgaged. On payment of the last instalment the mortgage shall be deemed to be discharged and an order passed under this sub-section shall be deemed to be a decree.� The compromise in this case as already indicated took in terms which were foreign to an order that could be passed under section 11(3) of Act 31 of 1958. Therefore, the principles enunciated in the above decision will not squarely apply to the case on hand. 12. On the question whether the terms of a compromise relate to the suit or not and whether the directions in a decree on compromise, not relating to the suit, could be validly executed, were considered by various High Courts in India. There is a sharp cleavage of judicial opinion on this question. 12. On the question whether the terms of a compromise relate to the suit or not and whether the directions in a decree on compromise, not relating to the suit, could be validly executed, were considered by various High Courts in India. There is a sharp cleavage of judicial opinion on this question. The High Courts of Madras, Allahabad, Andhra Pradesh, Madhya Pradesh, Patna and Oudh have taken the view that the executing court cannot refuse to execute the decree in such a case on the ground that an executing court cannot allow an objection to the decree to be raised before it. The Calcutta High Court held that such a decree is inoperative and invalid and cannot be executed. With this view, the Bombay High Court agreed. The Rajasthan High Court classified the cases into two. One, where the decree suffers from inherent jurisdiction and the other where the decree passed is incapable of execution either in whole or in part. I do not think it necessary for the purposes of this case, to indicate my view, since the case on hand has to be decided on its particular facts. In this case, the compromise is entered into by the parties in a petition under a special enactment. The jurisdiction of the court to pass an order, if the compromise did not intervene, is very limited and is of a peculiar nature. The compromise order passed in this case is completely outside the purview of an order that could be passed under section 11 (3) of Act 31 of 1958. It cannot therefore be said that the order passed, evidenced by Ext. D-2, is a decree coming within the expression 'so far as it relates to the suit'�. I therefore hold that the contention that the suit is barred by section 47 C.P.C. cannot be accepted. Even otherwise, there is nothing preventing this Court from treating the suit filed by the plaintiff as a petition in execution, directing the plaintiff to furnish particulars necessary for an execution petition. The plaintiff cannot be non-suited merely on this technical plea. However, it is not necessary to do so on the view taken by me on the question of law. 13. The further contention is that the plaintiff has forfeited his right to get back the properties. This also cannot be accepted. The plaintiff cannot be non-suited merely on this technical plea. However, it is not necessary to do so on the view taken by me on the question of law. 13. The further contention is that the plaintiff has forfeited his right to get back the properties. This also cannot be accepted. All that the compromise stated was that the O.P. will stand dismissed if the plaintiff did not deposit the amount as stipulated in the compromise. The schedule of properties was given in the compromise. The plaintiff was to pay a sum of Rs. 8,000 with interest at 7 ½ per cent per annum on or before 19th February 1964 when the defendant is to reconvey the property to the plaintiff or to his nominee. The amount is to be paid either to the advocate or to be deposited in court. It was also agreed that on payment of the amount and execution of the sale deed, two other suits also had to be withdrawn. All that the compromise stated was that if the amount was not deposited, the plaintiff will forfeit his claim made in O.P. No. 8 of 1959. In other words, the special benefits available under Act 31 of 1958 will be denied to him on his failure to set up to the terms of the compromise decree. One looks in vain in the compromise to see any material, which clearly indicates that the plaintiff, on failure to deposit the amount, will forfeit his rights in the property or lose his rights to get the property reconveyed to him. The contention therefore that the plaintiff has lost his right to get the property re-conveyed has therefore to be negatived. 14. From the materials available in the case, it is clear that the parties did not intend, when they entered into the compromise, to resort to the compromise decree alone as the method for the enforcement of the terms of the contract. A combined reading of paragraphs 2 (a) and 2 (e) of Ext. D-3 would indicate this. Paragraph 2 (a) provides forgetting the sale deed executed through court, if the defendant defaults to do so. Paragraph 2(e) shows that the parties contemplated other remedies as well to get the sale deed executed by the defendant. A combined reading of paragraphs 2 (a) and 2 (e) of Ext. D-3 would indicate this. Paragraph 2 (a) provides forgetting the sale deed executed through court, if the defendant defaults to do so. Paragraph 2(e) shows that the parties contemplated other remedies as well to get the sale deed executed by the defendant. The trial court was therefore right in interpreting these provisions to mean that the parties intended the agreement to be specifically enforced even if the Original Petition is dismissed. I also hold that the parties did not contemplate the execution of the decree as the sole remedy for getting the sale deed executed by the defendant. 15. The next important contention raised before me is, that time is the essence of the contract and since the plaintiff failed to perform his part of the obligation within time, he has forfeited his right to enforce the contract. The parties did not plead and join issue on the specific question that the contract in this case was one for reconveyance for which time is of the essence. Is time the essence in all contracts to give back the property? There is clearly a distinction between the two. I thought it necessary to draw the distinction between these two cases, since neither before the trial court nor before the appellate court, did the defendant specifically plead, that the contract in this case is one for reconveyance of the property, for which time is the essence of the contract. The question is pointedly raised before me in this second appeal. I shall answer this question with reference to the facts of the case and with reference to the principles of law governing such cases. 16. In an agreement to sell immovable property, time normally is not the essence of the contract, merely because a period has been stipulated in the contract. In addition to the fixing of a time, for the performance of the contract, there must be other attendant circumstances also to conclusively prove that the parties intended time to be the essence of the contract. In other words, from the materials available, a court should be in position to gather clearly the intention of the parties that the contract between them would become unenforceable, should the other party default in performing his obligation within the time specified. In other words, from the materials available, a court should be in position to gather clearly the intention of the parties that the contract between them would become unenforceable, should the other party default in performing his obligation within the time specified. This is the position so far as the contract for sale of immovable properties are concerned. 17. A contract for reconveyance stands on a different footing. It can be said that the contracts for reconveyance forms an exemption to the general rule enunciated above. In such a contract, there is no mutuality and it is an option contract. When a contract is for reconveyance the provisions should be strictly construed against the person in whose favour the option is available. 18. That the contract in this case is not one for reconveyance and that the parties did not intend time to be the essence of the contract is gatherable from the circumstances of the case. Although under the agreement the amount was payable on or before 19th February 1964, the evidence in this case is that the plaintiff did not offer to pay the amount before 19th February 1964. His evidence has not been accepted by the trial court when he deposed that he had offered to pay before 19th February 1964. However, there is material in this case to show that the parties did not intend payment prior to 19th February 1964 itself. P.W. 2 is the Advocate who appeared for the defendants in the Original Petition and in the suit. Rs. 1,000 was paid to him after 19th February 1964 and he accepted it. If the payment was to be before 19th February 1964, normally he would not have accepted the amount when tendered by the plaintiff. The evidence in this case is that P.W. 2 kept the amount with him for some time. I do not think it necessary to discuss the oral evidence regarding the actual date or time when this amount was paid and the period for which P.W. 2 kept it with him. Secondly, the fact that the plaintiff resorted to the provisions of Act 31 of 1958 indicates that he treated the transaction as a debt. After filing O.P. No. 8 of 1959, the plaintiff made certain payments which were received by the defendant. The amount of Rs. 8,000 way arrived at after deducting those payments. Secondly, the fact that the plaintiff resorted to the provisions of Act 31 of 1958 indicates that he treated the transaction as a debt. After filing O.P. No. 8 of 1959, the plaintiff made certain payments which were received by the defendant. The amount of Rs. 8,000 way arrived at after deducting those payments. The provision in the compromise decree for payment of future interest at 7 ½ per cent is another circumstance which would show that time was not the essence of the contract. This shows that the defendant wanted some compensation even if the plaintiff failed to pay the amount in time. The compromise was filed in court on 10th December 1963 and the date fixed for payment was 19th February 1964. If time was the essence of the contract one fails to see why provision should have been made for payment of interest for this short period. The other circumstances against the defendant's contention is that the paddy land as well as the building in item No. 1 were taken back by the plaintiff on the same day as the sale deed was executed. There is sufficient material by way of documentary evidence in the case to show that the plaintiff continued to be in possession of these properties. That the defendant did not attempt to get at possession of any of the properties, on the expiry of the term, is also indicative of the fact that neither party considered lime to be the essence of the contract. The defendant has not paid tax in respect of any of the properties while the plaintiff has. Therefore, on merits, it has to be held that the parties did not treat time as the essence of the contract. 19. Such being the facts. I turn to consider the question of law. In Sankalchand v. Joitaram, A.I.R. 1949 Bombay 193 the question when time can be taken as essence of the contract fell for consideration before a Division Bench of the Bombay High Court, In that case, the plaintiff sold the suit property to the defendant, though he continued to be in possession. Subsequently, the defendant entered into an agreement with the plaintiff with a stipulation for sale of the property back within three years with interest. On the same day, the plaintiff executed a rent note. A suit for specific performance was filed. Subsequently, the defendant entered into an agreement with the plaintiff with a stipulation for sale of the property back within three years with interest. On the same day, the plaintiff executed a rent note. A suit for specific performance was filed. The court held since the rent note formed part of the same transaction, since the defendants capital was to earn interest in the form of rent and the plaintiff was to remain in possession, time could not have been of the essence of the contract. 20. In Hindustan Construction Co. v. State of Bihar, A.I.R. 1963 Patna 254 it is held, that in order to establish, that time was the essence in a contract, the intention should be explicit and should be ascertainable from the circumstances of the case. In other words, the intention must be express and explicit and in unmistakable language in the agreement itself. When such intention is not explicit, it is possible to infer from the antecedent conduct of the parties and surrounding circumstances that time is not of the essence of the contract. 21. The case on hand is comparable to the Bombay case. I have already indicated the surrounding circumstances and have tried to establish that it could be inferred that the parties did not intend time to be the essence of the contract. The principles laid down in the above decision apply to the case and I am in respectful agreement with the principles enunciated therein. 22. I may also advert to a decision of this Court reported in Varghese v. Annamma, I.L.R. 1971 Kerala 494 where Poti, J., indicated the difference between the ordinary contract of sale of immovable property and the contract of reconveyance. The learned Judge observed: "In the case of a contract for reconveyance the party who seeks to enforce the contract must exercise it within the time prescribed. This is because, in a contract for reconveyance, there is no mutuality and since mutual obligations may not arise the contract must be construed strictly against the person in whose favour the option is provided for."� 23. This is because, in a contract for reconveyance, there is no mutuality and since mutual obligations may not arise the contract must be construed strictly against the person in whose favour the option is provided for."� 23. Counsel for the respondent contended with reference to section 55 of the Contract Act (2nd clause) that if it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to complete it at or before the specified time. He also referred me to sections 62 and 63 of the Contract Act which indicated the principle of novation and also principle of waiver. He referred me to two decisions in support of his submissions. In 1948 (2) M.L.J. 271 , along with a sale deed, an agreement to reconvey was also executed. The principal money bore interest at 12 per cent. The court held that rights of third parties not having intervened, the plaintiff could exercise the option for repurchase, notwithstanding long delay and from that long delay alone, further abandonment of right should not be presumed. 24. In A.I.R. 1949 Bombay 193 also, the facts were more or less similar. There also, the plaintiff, who sold the property, continued to remain in possession. There was an agreement subsequently to sell back the property. There was also a rent note, which formed part of the similar transaction. A Division Bench of the Bombay High Court held that since the agreement does not form part of the same transaction and the defendant's amount carried interest, time could not have been of the essence of the contract. The Division Bench quoted the observations of the Privy Council in A.I.R. (2) 1915 P.C. 83, where it is observed: "Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time."� 25. Section 28 sub-section (4) of the Specific Relief Act is also serviceable for the plaintiff in this case, which reads: "The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party."� 26. On a consideration of the facts and circumstances of this case, with reference to the authorities mentioned above, I hold that these second appeals should fail. In the result, the second appeals are dismissed, however, without costs.