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2010 DIGILAW 243 (CHH)

SHANKARLAL BIJREJA v. ASHOK B. AHUJA

2010-10-07

I.M.QUDDUSI, N.K.AGARWAL

body2010
ORDER N.K. Aganval, J.:- 1. Being aggrieved by the judgment and decree dated 28th July, 2007 passed by IXth Additional District Judge (FTC), Raipur in Civil Suit No. 45-A/2004 dismissing the suit filed by the appellant/plaintiff for specific performance of the contract and permanent prohibitory injunction against the respondents/defendants, the appellant has filed this appeal under Section 96 of the Code of Civil Procedure. 2. Facts giving rise to this appeal briefly are as follows:- (i) By an agreement for sell (Ex. P-1) dated 18-6-2003 entered into between the appellant as purchaser and the respondent as vender, the respondent agreed to sell the suit property comprising of Nazul Land and house No. 21/587 and 21/588 (new No. 5/587 and 5/ 588) Khasra No. 363 and 372 area about 13,000 Sq.Ft., situated at Ram Sagar Para Ward No.5, Raipur Patwari Halka No.6, Tehsil and Distt. Raipur at the rate of Rs. 185 per Sq.Ft., for total consideration of Rs. 24,00,000/- along with godown standing thereon. Prior to execution of above agreement Ex. P-1, the appellant paid Rs. 5 lacs (Rs. 3 lacs in cash and Rs. 2 lacs by two cheques) as earnest money. Under Clause (1) of the said agreement, the sale deed was to be executed after getting entire amount of consideration within a period of six months. The expenses have to be borne by the purchaser/appellant. Under Clause (2), it was agreed upon between the parties that on appellant's direction, instead of one sale deed for the entire suit property, more than one sale deeds comprising of part of the suit property could be executed in favour of the different purchasers at their own cost but sale deed was to be executed only after receiving full consideration amount. Under clause (3) if the purchaser so desires, he may get the suit land measured through any architect or engineer for his own satisfaction and at his own cost. Under clause (5), performance of the agreement was made essential within a period of six months from 26-5-2003. Under clause (6) it was agreed upon between the parties that vacant possession of the suit property including the godown was to be handed over by the vendor after getting full consideration before registration of the sale deed. (ii) On 8-11-2003, vide Ex. P-2, the appellant published public notice inviting objections. Under clause (6) it was agreed upon between the parties that vacant possession of the suit property including the godown was to be handed over by the vendor after getting full consideration before registration of the sale deed. (ii) On 8-11-2003, vide Ex. P-2, the appellant published public notice inviting objections. (iii) Vide Annexure P-3 dated 19-11-2003, a notice was sent calling upon the appellant to get the sale deed executed in terms of the agreement Ex. P-1 latest by 26-11-2003 by paying Rs. 19 lacs i.e. balance consideration amount else the agreement for sale would come to an end and the respondent will be free to sell the above land to any other intending purchaser. (iv) In reply to the above notice, the appellant sent reply Ex. P-4 showing his inability to get the sale deed executed on account of non-cooperation of the respondent in getting the suit property demarcated by not supplying the appropriate documents and due to non-handing over possession of the vacant suit property to the appellant for the purposes of measurement. It was further mentioned in the above reply that despite several requests made by the appellant to execute the sale deed in part, i.e. proportionate to the amount paid by the appellant, the respondent is not executing the sale deed in part and thus had violated the terms of the agreement. The further reason given in the reply was that although some original documents were handed over to the appellant in the month of October but all the original documents were not handed over, however after getting the documents, the appellant has published public notice in the newspaper and also started verification of the title of the respondent over the suit property. It was further mentioned that in fact the appellant has paid Rs. 5,50,000/- instead of Rs. 5 lacs as mentioned by the respondent. (v) Thereafter vide Ex. P-9 dated 15-12-2003 again a notice through his counsel was sent to the appellant informing him about extension of time upto 31-12-2003 and also about receipt of further part consideration of Rs. 3,90,000/- in terms of two cheques. 5,50,000/- instead of Rs. 5 lacs as mentioned by the respondent. (v) Thereafter vide Ex. P-9 dated 15-12-2003 again a notice through his counsel was sent to the appellant informing him about extension of time upto 31-12-2003 and also about receipt of further part consideration of Rs. 3,90,000/- in terms of two cheques. The appellant was also warned now not to violate the terms of the contract and get the sale deed executed after paying full consideration else the contract of sale would come to an end and the respondent will be free to sell out the suit property to any other intending purchaser and the amount paid would be forfeited. (vi) In reply to the above notice, the appellant sent a reply dated 3012-2003 vide Ex. P-10 repeating the same allegations and reasons for not getting the sale deed executed vide notice dated 21-12004. (vii) Vide Ex. P-13, the appellant sent a notice intimating the respondent to get the suit property vacated from the tenant as per assurance dated 12-1-2004; to hand over him the possession of the suit property; to clarify the ownership of the suit property, and then execute the sale deed in appellant's favour within a period of 10 days after receiving balance consideration else the appellant will initiate legal action against the respondent. In this notice, it was mentioned that the appellant through Shrichand Wadhwa has handed over three cheques amounting to Rs. 4,30,000/- to the respondent and thus he has already paid Rs. 14 lacs toward the above agreement. The respondent vide reply dated 4-2-2004 (Ex. P-16) denied the allegations of receipt of Rs. 4,30,000/- in the form of three cheques through Shrichand Wadhwa, also intimated that the appellant was not having sufficient funds for getting the sale deed executed. (viii) Further a notice was sent by the appellant dated 24-2-2004 (Ex.P-18) and thereafter he preferred a suit for specific performance of contract on 16-3-2004 also claiming permanent injunction restraining the respondent from creating third party right over the suit property. (ix) The respondent filed written statement inter alia denying the claim of specific performance of contract mainly on the ground: the appellant has not taken any steps within the time granted in the agreement as the time was essence of contract and the appellant was not ready and willing to get the sale deed executed. (ix) The respondent filed written statement inter alia denying the claim of specific performance of contract mainly on the ground: the appellant has not taken any steps within the time granted in the agreement as the time was essence of contract and the appellant was not ready and willing to get the sale deed executed. (x) Learned trial Court on appreciation of evidence led, submissions made and material placed, dismissed the suit. Hence this appeal. 3. Shri B.P. Sharma, learned counsel for the appellant would contend that in case of sale of immovable property, time is never regarded as essence of contract; the respondent himself extended the period of limitation by 31th December, 2003; also received consideration amount in part after execution of agreement and before filing of the suit in the form of three cheques amounting to Rs. 4,30,000/-, the respondent is guilty of not performing his part of contractual obligation i.e. of delivering of vacant possession of the premises before the registration, tenants were in occupation of the premises even after filing of the suit and the plaintiff cannot be expected to purchase the property against the terms of the contract-and with the burden which may amount to purchase of litigation with the tenants. Learned trial Court has failed to consider the evidence in its proper perspective inasmuch as the appellant has already deposited Rs. 14 lacs out of Rs. 24 lacs and showed his readiness and willingness to perform his part of the contract and it was the respondent who were not ready and willing to execute the sale deed even after receiving huge amount of Rs. 14 lacs as part consideration amount. The conduct of the respondent was inequitable and is relevant in a case relating to specific performance of contract. For this, reliance has been placed on the judgments of Supreme Court in case of Balasaheb Dayandeo Naik (dead) through Lrs. and others Vs. Appasaheb Daftatraya Pawarl, Silvey and others Vs. Arun Varghese and another2, Swarnam Ramachandran (Smt.) and another Vs. Aravacode Chakungal Jayapalan3, Chand Rani (Smt.) (Dead) by Lrs. Vs. Kamal Rani (Smt.) (Dead) by Lrs.4, Aloka Bose Vs. Parmatma Devi and others5. 4. and others Vs. Appasaheb Daftatraya Pawarl, Silvey and others Vs. Arun Varghese and another2, Swarnam Ramachandran (Smt.) and another Vs. Aravacode Chakungal Jayapalan3, Chand Rani (Smt.) (Dead) by Lrs. Vs. Kamal Rani (Smt.) (Dead) by Lrs.4, Aloka Bose Vs. Parmatma Devi and others5. 4. Shri Surana, learned Counsel appearing for the respondent would support the judgment and decree passed by the trial Court and would contend that time was essence of the contract, the appellant was never ready to pay the entire consideration amount in terms of the agreement of sale within the stipulated time even within the time extended by the respondent, on the contrary, he was always insisting upon delivery of possession before payment of entire amount of consideration and also insisting upon execution of sale deed in part in violation of the terms of the agreement, the respondent gave sufficient time to the appellant but the appellant was never ready and willing for payment of entire amount of consideration before obtaining possession of the suit property; also was not capable of payment of entire amount of consideration. He would further contend that as per admission of the appellant himself, he was not the sole purchaser of the suit property and the suit was not filed on behalf of all purchasers and, therefore, was incompetent. The payment of Rs. 4,30,000/- was never received by the respondent and the same was deposited by the appellant in the bank account of the respondent in order to show that the contract is still subsisting and in sucha situation, the trial Court has rightly dismissed the suit. Shri Surana placed his reliance upon the judgment of Hon'ble Supreme Court in case of H.P. Pyarejan Vs. Dasappa (Dead) by Lrs. and others6, Bal Brishna and another Vs. Bhagwan Das (Dead) by Lrs. and other7 and A.C. Arulappan Vs. Smt. Ahalya Naik8. 5. We have heard learned counsel for the parties and perused the judgment and decree impugned and record of the trial Court. The core questions arise for determination in this case are : (i) Whether in the facts and circumstances of the case, the time was essence of contract? (ii) Whether the appellant had succeeded to prove his readiness and willingness to perform his part of contract within the meaning of Section 16-C of the Specific Reliefs Act, 1963 ? The core questions arise for determination in this case are : (i) Whether in the facts and circumstances of the case, the time was essence of contract? (ii) Whether the appellant had succeeded to prove his readiness and willingness to perform his part of contract within the meaning of Section 16-C of the Specific Reliefs Act, 1963 ? (iii) Whether the appellant is entitled for a decree of specific performance of contract? 6. Let us examine the facts. As per the agreement, payment of entire consideration was to be paid by the appellant necessarily within six months from 26-5-2003. There is no condition in the agreement by which the respondent has to deliver the possession of the premises to the appellant for the purpose of demarcation, nor demarcation of the property was made essential before the execution of the sale deed or before payment of entire consideration amount, on the contrary, it has been mentioned that if the purchaser so desires, he may get the suit land measured through any architect or engineer for his own satisfaction and at his own cost. The total description and identification of the property was not in dispute. The total consideration payable was Rs. 24 lacs. It was not mentioned that it would vary if on demarcation the land will found more or less in area. Admittedly, the tenants were in occupation of the suit premises on the date of execution of agreement of sale. Vide reply dated 25-11-2003 (Ex. P-4), 30-122003 (Ex. P-10), the appellant insisted upon delivery of vacant possession for the purpose of demarcation, at the same time insisted upon execution of sale deed of the area proportionate to the amount paid by the appellant. The above demand was in violation of the terms of the agreement Ex. P-1. In para 10 and 12 of the plaint, the appellant reiterated the same. In his statement, P.W. 1 Shankarlal has admitted that in absence of delivery of possession, he has not paid the entire amount of consideration. In para 16, it was also admitted that 3 cheques dated 12-1-2004 amounting to Rs. 1,00,000/-, Rs. 1,20,000/- and Rs. 2,10,000/- total Rs. 4,30,000/- were given to the defendant, without obtaining any receipt, nor the same was paid from his bank account and he is not aware from which account the same was paid. In para 16, it was also admitted that 3 cheques dated 12-1-2004 amounting to Rs. 1,00,000/-, Rs. 1,20,000/- and Rs. 2,10,000/- total Rs. 4,30,000/- were given to the defendant, without obtaining any receipt, nor the same was paid from his bank account and he is not aware from which account the same was paid. He further deposed in para 15 of his statement that he has verified the title of respondents before 8-11-2003 i.e. date of publication of public notice by him in the newspaper. In para 9 of his statement, it was stated that Shrichand Wadhwa, his wife and he himself were joint intending purchaser of the suit property having each 33% share of the suit property as per agreement (Ex. P-1). 7. P. W. 3 Shrichand Wadhwa who is by occupation a broker has admitted in para 5 of his statement that as per the agreement (Ex. P-1), registration of the sale deed was to be got executed within six months from 26-5-2003, also that he has received all the documents regarding suit property before expiration of above six months i.e. in the month of October, 2003. In para 8, it was stated that cheque of Rs. 6,00,000/- were given from account of Smt. Laxmi Devi Bireja which is a joint account of his and Smt. Laxmi Devi Bireja. In para 9 of his statement, it has been categorically admitted that the respondent was ready to execute the sale deed after getting the entire sale consideration from the appellant but they were not ready to get the sale deed executed before measurement and getting possession of the suit property. It was further stated by him in the same paragraph that he was not intending to purchase the suit property and the agreement was in the name of appellant. He further admitted in para 9 of his statement that cheque of Rs. 3,90,000 were given by him to the respondent, although he denied the suggestion that the appellant was not having sufficient money. 8. The Supreme Court in case of Chand Rani4 (Supra) has held in para 25 of its judgment: "From an analysis of the above case-law it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. 8. The Supreme Court in case of Chand Rani4 (Supra) has held in para 25 of its judgment: "From an analysis of the above case-law it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are: (i) From the express terms of the contract; (ii) From the nature of the property; and (iii) From the surrounding circumstances, for example: the object of making the contract. “ 9. The Supreme Court in the case of Balasaheb Dayandeo Naik1 (supra), relying upon the constitution bench decision of the Supreme Court in the case of Chand Rani4 (supra) has observed in para 10 and 11 of its judgment as under : - “10. In Chand Rani (Smt.) (dead) by LRs. Vs. Kamal Rani (Smt.) (dead) by LRs, (1993) 1 SCC 519, a Constitution Bench of this Court has held that in the sale of immoveable property, time is not the essence of the contract. It is worthwhile to refer the following conclusion (SCC pp. 525, 527 and 528 para 19, 21 and 23) : “19. It is a well-accepted principle that in the case of sale of immovable properly, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language." 21. In Govind Prasad Chaturvedi v. Hari Duff Shastri (1977) 2 SCC 539 following the above ruling it was held at pages 543-544: (SCC para 5) ‘5... An intention to make time the essence of the contract must be expressed in unequivocal language." 21. In Govind Prasad Chaturvedi v. Hari Duff Shastri (1977) 2 SCC 539 following the above ruling it was held at pages 543-544: (SCC para 5) ‘5... It is settled law that the fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. When a contract relates to sale of immovable property it will normally be presumed that the time is not the essence of the contract. [Vide Gomathinayagam Pillai v. Pallaniswami Nadar 1 (at p. 233).] It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract. 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 in a contract of sale of land stipulation as to time is not the essence of the contract.’ 23. In Indira Kaur (Smt) v. Sheo Lal Kapoor (1988) 2 SCC 488 in paragraph 6 it was held as under: ‘6... The law is well-settled that in transactions of sale of immovable properties, time is not the essence of the contract.’ (emphasis in original) 11. It is clear that in the case of sale of immoveable property, there is no presumption as to time being the essence of the contract. “8. Even where the parties have expressly provided that time is the essence of the contract, such a stipulation will have to be read along with other provisions of the contract. For instance, if the contract was to include clauses providing for extension of tune in certain contingencies or for payment of fine or penalty for every day or week, the work undertaken remains unfinished on the expiry of the time provided in the contract, such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract. In the case on hand, though the parties agreed that the sale deed is to be executed within six months, in the last paragraph they made it clear that in the event of failure to execute the sale deed, the earnest money will be forfeited. In the case on hand, though the parties agreed that the sale deed is to be executed within six months, in the last paragraph they made it clear that in the event of failure to execute the sale deed, the earnest money will be forfeited. In such circumstances, the above-mentioned clauses in the last three paragraphs of the agreement of sale would reader ineffective the specific provision relating to the time being the essence of contract. In the case on hand, though the parties agreed that the sale deed is to be executed within six months, in the last paragraph they made it clear that in the event of failure to execute the sale deed, the earnest money will be forfeited. In such circumstances, the above-mentioned clauses in the last three paragraphs of the agreement of sale would render ineffective the specific provision relating to the time being the essence of contract." 10. The Supreme Court in case of Silvey and others2 (supra) has held: - “14. As regards the false plea of the defendants, the effect needs to be noted. It was pleaded that defendant 3 had gone to the house of Plaintiff 2 in Alleppey prior to receiving any letter from the plaintiffs and had spoken that they had told him that they were not keen on enforcing the application under Ext. A-1. But when examined as DW-1, the said Defendant 3 admitted that he had never met the plaintiff as pleaded in the written statement and that he or any other defendant had never gone to Alleppey to meet Plantiff 2 at his residence to speak about the performance of the contract. The plea stated in the written statement was abandoned in evidence. In Lourdu Mari Davidv. Louis Chinnaya Arogiaswamy [(1996) 5 SCC 589] it was noted that the conduct of the defendant cannot be ignored while weighing the question of exercise of discretion for decreeing or denying a decree for specific performance. The High Court has, after analysing the factual position, come to the conclusion that the defendants were really not ready to perform their obligation in terms of the contract and had taken a false plea in the written statement." 11. The High Court has, after analysing the factual position, come to the conclusion that the defendants were really not ready to perform their obligation in terms of the contract and had taken a false plea in the written statement." 11. In case of Swaram Ramachandran3 (supra), while interpreting Section 37 and 55 of the Contract Act, 1872, Hon'ble Apex Court has held that time is presumed not to be of essence of the contract relating to immovable property, but it is of the essence in contracts of reconveyance or renewal of lease. Further, a vendor has no right to make time of the essence, unless he is ready and willing to proceed to completion and secondly, when the vendor purports to make time of the essence, the purchaser must be guilty of such gross default as to entitle the vendor to rescind the contract. Whether time is of the essence, is a question of fact and real test is the intention of the parties. It depends upon the facts and circumstances of each case. 12. By applying the aforesaid legal proposition laid down by the Supreme Court in the dicta of above referred cases in the facts and circumstances of the present case, it is crystal clear that the appellant utterly failed to prove his readiness and willingness to perform his part of the contract. It cannot be over looked that the appellant never came forward with the entire amount of consideration for getting the sale deed executed in his favour. Every time, he insisted on delivery of possession before such payment, also insisted for execution of sale deed in part in proportion to the amount paid by him which was not justified. Such an insistence could only be regarded as trying to vary the terms of the agreement. On the whole, the transaction failed primarily on account of non-payment of entire amount of consideration either within the time stipulated in the agreement or within the extended time i.e. till 31-12-2003. If on this account it was treated as a breach it was understandable and could not be said to be unjustified. If we analyse the amount paid by the appellant in part on various occasions, it appears that the said amount was also arranged by Shrichand Wadhwa i.e. brother-in-law of the appellant. If on this account it was treated as a breach it was understandable and could not be said to be unjustified. If we analyse the amount paid by the appellant in part on various occasions, it appears that the said amount was also arranged by Shrichand Wadhwa i.e. brother-in-law of the appellant. It appears, the appellant was not completely aware about the fact, how and in what manner, the amount was paid to the respondent. This fact also shows lack of readiness on the part of the appellant. This can be analyzed in another way also. The appellant who was insisting upon regularly on demarcation and prior possession of the suit property, has suddenly come forward with the suit claiming specific performance of contract without insisting upon prior possession and without disputing title, area, description and identity of the suit property. Had there been a case in which the appellant would have come forward with the entire amount of consideration and would have requested the respondent: "please take the entire amount of consideration and execute the sale deed and hand over its vacant possession to him" and if in that circumstances, the respondent was unable to hand over possession of the suit property, it could have been said that the respondent was at the fault. This is not a case here. In the above circumstances, it cannot be said that equity lies in appellant's favour and in our considered opinion, the suit has rightly been dismissed. 13. However, we find that there is no forfeiture clause in the agreement (Ex. P-1). There is not much dispute regarding payment of 14 lacs to the respondent. Although it is not clear that how and in what manner Rs. 4,30,000/- has been paid to the respondent but it is also true that same is lying deposit with him. Further looking to the respondent's counter claim, it is also not in dispute that on the date of suit, there was no hike in the price of the suit property. Although the refund of consideration has not been claimed by the appellant in the prayer clause or in the suit but we are of the opinion that the appellant is entitled for a decree of refund of the above amount. Although the refund of consideration has not been claimed by the appellant in the prayer clause or in the suit but we are of the opinion that the appellant is entitled for a decree of refund of the above amount. It is settled law that in proper cases where specific performance is refused, the Court may direct refund of amount to the plaintiff even though he has not specifically asked for it in the plaint. 14. In view of the above, the appeal is allowed in part. The decree passed by the trial Court, dismissing the suit of the plaintiff for specific performance of the contract of sale is maintained. However, a decree for recovery of Rs.14,00,000/ is passed in favour of the plaintiff/appellant against the respondent by way of equitable relief 15. In the circumstances of the case, there shall be no order as to costs of this appeal. Cost of the Court below shall be borne by the parties in accordance with the decree passed by the trial Court. Appeal Dismissed.