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2010 DIGILAW 876 (KER)

Alex Thomas v. Rajan

2010-11-09

P.BHAVADASAN, THOTTATHIL B.RADHAKRISHNAN

body2010
Judgment :- Thottathil B. Radhakrishnan, J. 1. Plaintiffs in a suit for specific performance of a contract for sale are the appellants. 2. On the basis of Exts.A1 to A7 and A16, the facts that emerge are as follows: The defendants, husband and wife, entered into Ext.A1 dated 6.2.1996, agreeing to sell and extent of 1 acre and 37 cents to the plaintiffs or their nominees for consideration fixed at Rs.19,000/- per cent. They also received Rs.1 lakh as advance and the period for performance of the contract for sale was fixed to be up to 31.10.1996. Later, on measurement, the available extent was found to be only 1 acre and 34 cents instead of 1 acre and 37 cents. Ext.A2 was executed for 23 cents. That sale was in favour of the first plaintiff. This was followed by Ext.A3 for 20 cents in favour of a stranger. The advance of Rs.1 lakh (earnest) was adjusted towards sale considerations in Exts.A2 and A3; Rs.45,000/- being adjusted against Ex.A2 transaction and Rs.55,000/-against Ext.A3 transaction. Thereafter, Ext.A4 was executed on 26.10.1996 in favour of a stranger for 25 cents. Ext.A5 was executed on 28.10.1996 for 25 cents in favour of the first plaintiff. Ext.A6 was executed on 29.10.1996 for 25 cents in favour of a stranger and Ext.A7 was executed on 30.10.1996 for 3 cents in favour of a stranger. Thereby the total extent of 1.21 acres was conveyed by the defendants to different persons, including the first plaintiff. As discernible from Ext.A6, the defendants stand to say that all those transactions were made with reference to Ext.A1 and in discharge of the obligations thereunder. The balance extent left is 13 cents. The consideration at which the land was conveyed under Exts.A2 to A7 is at the rate of Rs.19,000/- per cent, as stated in Ext.A1. 3. Controversies appear to have arisen on 31.10.1996, the date mentioned in Ext.A1 as the date by which the transactions thereunder should be completed. According to the plaintiffs, Ext.A8 sale deed was prepared on stamp papers worth Rs.24,700/- and Exts.A9 and A10 filing sheets and other necessary papers were prepared in connection with the sale deed for 13 cents to be registered on 31.10.1996. According to the plaintiffs, Ext.A8 sale deed was prepared on stamp papers worth Rs.24,700/- and Exts.A9 and A10 filing sheets and other necessary papers were prepared in connection with the sale deed for 13 cents to be registered on 31.10.1996. The suit is laid on 11.11.1996, on the allegation that the defendants did not turn up for executing documents on 31.10.1996 and when they were approached on that day, they promised to go to register the documents on the succeeding day, however, that they did not present themselves for signing or having the documents registered on 1.11.1996 or even on 2.11.1996, on which dates, the plaintiffs are shown to have been present in the Sub Registrar’s office. For this, they stood as witnesses in Exts.A11 and A15. Ext.A16 is a notice issued on behalf of the defendants through an Advocate on 1.11.1996, taking the stand that the period covered by Ext.A1 agreement had expired on 31.10.1996 and that Exts.A2 to A7 having been executed in furtherance of Ext.A1, nothing survives and the said contract has been discharged, as the plaintiffs committed default in not taking the sale deeds for the remaining extent. 4. In answer to the suit, the defendants contended that the entire earnest covered by Ext.A1 having been adjusted against Exts.A2 and A3, first two among the sale deeds; nothing survives thereafter and there is no enforceable contract for sale. They also pleaded that plaintiffs were in breach in not having the agreement ultimately performed. 5. Apart from one of the plaintiffs as PW1, the court below heard the evidence of the first defendant as DW1 and the document writer, who was involved in the preparation and presentation of all the documents between the parties, including Exts.A1 to A7, as PW2. His testimony is not impeached by the defendants on any issue of disloyalty or any other ground which is acceptable or sufficient enough to dislodge the credibility of that witness. With this, we find PW2 stating categorically that Exts.A8, A9 and A10, the documents which the defendants had to execute on 31.10.1996 were prepared and were ready, however, that the defendants did not come over to his office to sign them or for going to the Sub Registrar’s office for registering them. 6. With this, we find PW2 stating categorically that Exts.A8, A9 and A10, the documents which the defendants had to execute on 31.10.1996 were prepared and were ready, however, that the defendants did not come over to his office to sign them or for going to the Sub Registrar’s office for registering them. 6. The court below, however, dismissed the suit holding that the earnest covered by Ext.A1 having been adjusted against Exts.A2 and A3, the contract for sale contained in Ext.A1 did not further survive for enforcement. With that view, specific performance was not granted. 7. As already noted, the defendants issued Ext.A16 on the date immediately followed the last date fixed in Ext.A1 for performance of the agreement. Generally, the law in India is that it would be presumed that time is not for the essence of any contract for sale of immovable property unless there are express stipulations which generate consensus ad idem specifically to the contrary. We do not find any recital in Ext.A1 with such specificity that persuades us to hold that time was of the essence of Ext.A1, the contract for sale, Nevertheless, we find that to a question put to PW1, one of the plaintiffs, as to whether the parties have specifically fixed 31.10.1996 on the clear understanding that time shall be of the essence of the contract, he answered in the affirmative, with fair assertion. Therefore, we may proceed by taking it that time was treated by the parties as of the essence of Ext.A1 contract for sale. 8. Then, the question that arises for decision is as to whether it was the plaintiffs or the defendants who were in breach. As already noted, PW2, the document writer whose credibility is not impeached, categorically stated that Exts.A8 to A10 documents were prepared and made available on 31.10.1996, however, that the defendants did not go over to PW2’s office for signing and having the documents registered. The availability of the stamp papers purchased by funds supplied by the vendees is a matter of record going by Exts.A8 to A10. Original documents as prepared without the signature of the parties are part of the evidence of the case. The availability of the stamp papers purchased by funds supplied by the vendees is a matter of record going by Exts.A8 to A10. Original documents as prepared without the signature of the parties are part of the evidence of the case. We also see that if the defendants had, as a matter of fact, gone to the office of the document write PW2 on 31.10.1996, there is no logic or reason in the common course of human conduct to assume that the documents would not have been singed and registered on that day. This inference is all the more probabilised by the anxiety shown in having Ext.A16 notice sent through an advocate on the very next day, i.e., 1.11.1996. Hence we may take it that the plea in the written statement runs quite contrary to the first among the statements made by the defendants in relation to their views on Ext.A1, as is contained in Ext.A16. Even if Ext.A16 is attempted to be explained off by DW1 that it was so issued on the basis of erroneous instructions, we are not prepared to accept it. Ext.A16 contains the specific stand taken, having regard to the position of law. Not only that, there is nothing in the written statement trying to take off anything that is contained in Ext.A16 which was admittedly issued earlier. In this view of the matter, we have no hesitation to hold that even if time was of the essence of the contract, it was the defendants who were in breach of contract and not the plaintiffs. 9. With the aforesaid, we need to answer an issue of law touching the finding of the court below that the earnest covered by Ext.A1 having been adjusted against Exts.A2 and A3, the first two among the sale deeds, the effect of Ext.A1 contract for sale no more survives. Section 2(e) of the Indian Contract Act, 1872 says that every promise and every set of promises, forming the consideration for each other, is an agreement and clause (f) of that Section says that promises which form the consideration or part of consideration for each other, are called reciprocal promises. Section 2(e) of the Indian Contract Act, 1872 says that every promise and every set of promises, forming the consideration for each other, is an agreement and clause (f) of that Section says that promises which form the consideration or part of consideration for each other, are called reciprocal promises. Adverting to the definition of ‘a contract for sale’ as contained in Section 54 of the Transfer of property Act, 1882, it can be see that a contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. These provisions vividly exclude the requirement of any amount being paid, either as earnest or as security since the impact of the reciprocal consideration between the parties by themselves would result in a concluded contract for sale and such conclusion of contract for sale is not dependent upon the payment of any amount offered as earnest or security. There is one more point in this regard in the Transfer of Property Act itself. Section 55(6)(b) provides, among other things, that the buyer is entitled, when he properly declines to accept the delivery of the property, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. The provision of the words ‘if any’ within brackets in that statutory extract provides abundant legislative support to the view that earnest is not one of the essential ingredients of the making of a contract for sale. Advertence to Section 2 (d) of the Contract Act would further clarify the position that the word ‘consideration’ in relation to a contract is not to be understood as dependent on any amount (money) that is dealt with in terms of the contract. When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. The concept of earnest only means that it is money given in token of a bargain made. The concept of earnest only means that it is money given in token of a bargain made. This, when is advance, goes as part of the sale price and when it is eligible for being treated as security in terms of law, would be dealt with in that manner for adjustment of liabilities in terms of law. In this context, we may also advert to the definition of ‘sale’ as defined in Section 54 of the Transfer of Property Act. It provides that sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Therefore, it is not absolutely essential that price is paid for concluding a sale in terms of Section 54 of that Act. Price can also continue to be as part of a promise to be fulfilled at a later point of time. In this view of the matter, we find no legal foundation for the finding of the court below that the contract for sale as contained in Ext.A1 stood discharged merely because the earnest covered thereunder was adjusted as part of consideration of the sale covered by Exts.A2 and A3 sale deeds. Hence, that finding is reversed. 10. With the aforesaid, we find that Ext.A1 subsisted on 31.10.1996, its breach was committed by the defendants and a plaintiffs had not contributed to the non-execution of the deed of sale on 31.10.1996. 11. In the light of the above, another issue that arises for decision is as to whether in the exercise of discretion under Section 20 of the Specific Relief Act, 1963, the plaintiff is entitled to decree. The court below did not address itself specifically on exercise of discretion in terms of the provisions of that Act. It appears to have acted on its finding that Ext.A1 did not subsist for being enforced in terms of law as contained in Section 20 of that Act. The circumstances that existed at the time of the contract, the cause of action, the point of time at which the plaintiff sued the defendants etc. are relevant considerations for exercise of discretion. As already noted, the period of performance of the obligations under Ext.A1 was to be by 31.10.1996. The defendants issued Ext.A16 notice on 1.11.1996 taking their stand that the agreement does not survive. We have held above that the defendants had committed breach of the contract for sale. are relevant considerations for exercise of discretion. As already noted, the period of performance of the obligations under Ext.A1 was to be by 31.10.1996. The defendants issued Ext.A16 notice on 1.11.1996 taking their stand that the agreement does not survive. We have held above that the defendants had committed breach of the contract for sale. The suit is filed on 11.11.1996, ie., on the 12th day of the alleged breach. With this, there is no conduct of the plaintiffs that could be treated as having created any hardship to the defendants setting the balance of discretion against the plaintiffs. The question, therefore, is as to whether the discretion has to be exercised in favour of the defendants under any other circumstances. 12. Explanation 1 occurring after sub section (2) of section 20 of the Specific Relief Act provides that mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage or hardship within the meaning of clauses (a) and (b) of that sub section. The circumstances specified in Section 20 are only illustrate but not exhaustive, as noted by the Apex Court in Sardar Singh v. Krishna Devi [(1994) 4 SCC 18]. The courts have to take into consideration the circumstances of each case, the conduct of the parties or respective interest in the contract. Sub section (1) of Section 20 stands to advice that the discretionary jurisdiction to decree specific performance does not oblige the court to grant such relief, merely because it is lawful to do so, but that discretion is to be exercised in a sound and reasonable manner, guided by judicial principles and capable of correction by a court of appeal. The legislative indication in that provision of statute is that the exercise of discretion shall not be arbitrary and reasonableness has to be founded on some judicial principle. While we note that mere inadequacy of consideration may be irrelevant, the passage of time that has gone through with the litigation apparently tilts the scales, since escalation in land value cannot be ignored. While we note that mere inadequacy of consideration may be irrelevant, the passage of time that has gone through with the litigation apparently tilts the scales, since escalation in land value cannot be ignored. In that view of the matter, the pendency of this litigation from the trial court to this court from sometime in November, 1996, till now, advises us to hold that the discretion needs to be exercised against the decreeing specific performance, however, on terms that the defendants will suffer the entire cost of this litigation both here and in the court below. 13. For the aforesaid reasons, we would sustain the decree of the court below for reasons which are different and stated herein above, but modify the order as to costs. 14. In the result, this appeal is ordered as follows: (i) The findings in the judgment are set aside. (ii) The decree of the court below, except as regards costs, is confirmed. (iii) The plaintiffs-appellants are granted a decree for costs of this appeal and in the suit to be realizable from the defendants and their assets. (iv) The plaintiffs-appellants would also be eligible for the difference in any value of stamp paper that they may suffer on surrender of the stamp papers on which Ext.A8 is engrossed in terms of law. This shall also form part of the order of costs imposed hereby. (v) The LCR will be transmitted forthwith to the court below and the court below is directed to release Exts.A8, A9 and A10 to the appellants-plaintiffs after retaining appropriate copies in accordance with law.