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Madras High Court · body

2012 DIGILAW 1380 (MAD)

Rajshree Textiles v. Saraswathi Devi

2012-03-16

R.S.RAMANATHAN

body2012
Judgment 1. The plaintiff in O.S.No.90 of 1994 on the file of the XVII Assistant Judge, City Civil Court, Chennai is the appellant. He filed the suit for declaration that the sale deed dated 28.2.1992 executed in respect of the suit 'B' schedule property in favour of the 15th defendant/ 15th respondent herein is void, sham and nominal and not binding on the plaintiff/ appellant and directing the defendants 1 to 14/ respondents 1 to 14 herein to execute and register the sale deed in favour of the appellant/ plaintiff in respect of the suit 'B' schedule property. That suit was dismissed and the appeal filed in A.S.No.131 of 2004 on the file of the V Additional Judge, City Civil Court, Chennai was also dismissed and as against the same, this Second Appeal is filed. 2. The case of the appellant/ plaintiff was that he was a tenant in respect of the suit 'B' schedule property and the present rent at the time of filing of the suit was Rs.185/-per month. The suit property belonged to one M.Dharam Chand and H.Sumermal and the said Dharam Chand died intestate on 5.2.1989 leaving behind his widow and children who are the defendants 1 to 6 and other co-owner H.Sumermal also died intestate on 29.2.1989 leaving behind his widow and children who are the defendants 7 to 14. On 15.1.1991 the defendants 1 to 14 represented by the defendants 1 and 7, in the presence of witnesses Suresh Kumar Surana, Rajesh Metna, Premchand Chordia, Pradeep Kumar Chordia and others offered to sell the suit 'B' schedule property to the plaintiff at Rs.60,000/- and that was accepted by the plaintiff/ appellant and a token advance of Rs.100/- was paid. The defendants also applied to the Court seeking permission to sell the minors' interest by filing O.P.Nos.274 and 275 of 1991 and that was allowed on 7.11.1991 and even thereafter, the defendants did not sell the property to the plaintiff/ appellant and without informing the plaintiff/ appellant, the defendants/ respondents 1 to 14 sold the property to the 15 respondent herein and registered a sale deed dated 28.2.1991. The appellant/ plaintiff paid the rent upto February 1992 and subsequent rent was refused by the 1st respondent/ 1st defendant and therefore the appellant/ plaintiff filed R.C.O.P.No.1436 of 1992 to deposit the rent and in that application the counter was filed in December 1992 by the respondents 1 to 14 and in the counter they have stated that the property was already sold by them to the 15th respondent herein and then only he came to know about the sale and after getting particulars about the document he found that the defendants 1 to 14 sold the suit 'B' schedule property to the 15th respondent herein and therefore filed the suit for the relief as stated above. 3. The respondents 1 to 14 contested the suit stating that there was no agreement between the parties agreeing to sell the property to the appellant/ plaintiff and as the owners of the property, they are entitled to sell the property to any person and they sold the property to the 15th respondent herein for valuable consideration and they ceased to be the owners of the property, they are not necessary parties in R.C.O.P.No.1436 of 1992 and that was the reason for not receiving the rent and the appellant/ plaintiff was also aware of the sale in favour of the 15th respondent and the appellant/ plaintiff is not entitled to the relief of specific performance. 4. The trial Court held that the appellant/ plaintiff did not establish the alleged oral agreement of sale and therefore he is not entitled to the relief of specific performance and therefore he cannot question the validity of the sale deed executed in favour of the 15th respondent and dismissed the suit. The lower appellate Court also independently appreciated the oral and documentary evidence and confirmed the Judgement of the trial Court and hence the Second Appeal. 5. At the time of admission of the Second Appeal, the following substantial question of law was framed: (1) Whether in the facts and circumstances of the case, the Courts below are right in coming to the conclusion that the appellant has not adduced any evidence to prove the oral agreement of sale, in the teeth of the evidence adduced by the respondents in earlier proceedings in O.P.Nos.274 and 275 of 1991? 6. 6. On the basis of the pleadings and evidence in my opinion, the following substantial questions of law also arise for consideration and they are also framed as additional substantial questions of law and the learned counsel appearing for the parties also addressed their arguments on these substantial questions of law. Additional substantial questions of law: (2) Whether the appellant is entitled to the discretionary relief of specific performance having regard to the conduct of the appellant in not approaching the Court immediately on coming to know of the sale in favour of the 15th respondent ? (3) Whether the appellant is entitled to the discretionary relief of specific performance having regard to the provisions of Section 20 of the Specific Relief Act ? 7. The learned counsel for the appellant submitted that both the Courts erroneously held that there is no oral agreement of sale between the parties and the plaintiff/appellant did not prove the oral agreement of sale without appreciating the Exs.A3, A4, A5 and A6. The learned counsel for the appellant submitted that admittedly, the suit 'B' schedule property which is a subject matter of the suit is part of the 'A' schedule property and there were tenants in the 'A' schedule property and the appellant is the tenant in respect of 'B' schedule property and the respondents 1 to 14 wanted to sell the property and offered the same to the tenants and the tenants also agreed to purchase their portion and price was also fixed between the appellant and the respondents 1 to 14 and that was also admitted by the appellant in the petition filed in O.P. Nos.274 and 275 of 1991 filed before the Court below seeking permission of the Court to get the consent by selling the minors' shares and those two petitions were allowed on 7.11.1991 as evidenced by Exs.A5 and A6 and therefore having regard to the admissions made by the respondents 1 to 14 in O.P. Nos.274 and 275 of 1991 the Courts below ought to have held that there was an agreement of sale between the appellant and the respondents 1 to 14 and the respondents 1 to 14 agreed to sell the suit 'B' schedule property to the appellant/ plaintiff for a sum of Rs. 60,000/-having regard to the extent of property and no notice was sent to the appellant by the respondents 1 to 14 demanding the appellant to pay the sale consideration and without the knowledge of the appellant and without giving any opportunity to the appellant to purchase the suit 'B' schedule property, they sold the 'B' schedule property to the 15th respondent and the appellant came to know about the same only after seeing the counter filed by the respondents 1 to 14 in R.C.O.P. No.1436 of 1992 filed by the appellant and thereafter they made enquiries and found that the 15th respondent purchased the property and filed the suit for specific performance on 4.1.1994 and therefore there was no laches on the part of the appellant and without appreciating all these aspects the Courts below dismissed the suit holding that there was no agreement of sale. 8. He further contended that time is not the essence of contract in respect of immovable property and had the respondents 1 to 14 informed about the order passed in O.P. Nos.274 and 275 of 1991 and asked the appellant to purchase the property, the appellant would have purchased the property. He further submitted that though the 15th respondent had stated that he informed the appellant about his purchase by sending notice dated 1.4.1992 no such document was produced and the oral agreement of sale was also spoken to by P.Ws. 2 to 5 and the 15th respondent is not a bona fide purchaser and he was aware of the agreement between the parties and had he made enquiries he would have realized that there was an agreement of sale between the landlord and tenant and therefore the sale in favour of the 15th respondent is liable to be set aside and the appellant is entitled to the relief of specific performance. 9. On the other hand, Mr. P.K.Sivasubramanian the learned counsel for the respondents submitted that it is admitted by the appellant that after the order passed in O.P. Nos. 9. On the other hand, Mr. P.K.Sivasubramanian the learned counsel for the respondents submitted that it is admitted by the appellant that after the order passed in O.P. Nos. 274 and 275 of 1991 the appellant was informed about the order and thereafter the appellant did not come forward to purchase the property and therefore the respondents 1 to 14 have no other option except to sell the property to the 15th respondent and even according to the case of the appellant he was aware of the sale in December 1992 and thereafter he did not take any steps for one year and only in January 1994 he filed the suit for specific performance and there was no agreement of sale between the parties and what has been stated in O.P. Nos. 274 and 275 of 1991 is a general statement and it is not stated specifically that the respondents 1 to 14 agreed to sell the suit 'B' schedule property to the appellant for a sum of Rs.60,000/-and that was rightly appreciated by the Court below and therefore the Court below has rightly held that there was no agreement of sale as alleged by the appellant and therefore the appellant is not entitled to the relief of specific performance. 10. Heard both sides. 11. It is admitted that the appellant is the tenant of 'B' schedule property and the respondents 1 to 14 were the landlords. It is seen from the order passed in O.P.Nos.274 and 275 of 1991 that those two petitions were filed seeking permission from the Court to sell the minors' shares. Admittedly, the 6th respondent, Bharath Jain was the minor in the year 1991 and the respondents 11 to 14 were also minors in the year 1991. A reading of the petition filed in O.P. Nos.274 and 275 of 1991, Exs. A3 and A4 would make it clear that the respondents 1 to 14 wanted to sell the property and the tenants agreed to purchase their respective portion along with the undivided share in the land for a price agreed between the parties and the entire property namely 'A' schedule property was agreed to be sold for a sum of Rs. 6,16,225/-. 6,16,225/-. As the minors are also the owners of the property with the intention to give good title to the purchaser the application was filed seeking permission of the Court to sell the minors' shares that was accepted and O.P.Nos.274 and 275 of 1991 were allowed and the major shareholders namely the respondents 1 to 5 and 7 to 10 were permitted to sell the property along with the minors interest and the minor's share of sale consideration was directed to be deposited into Court. Therefore on a reading of Exs.A3 to A5 and A6, I am of the opinion that there was an oral agreement of sale between the parties and the respondents 1 to 14 agreed to sell the 'B' schedule property to the appellant for a specified amount and the finding of the Court below that there was no oral agreement of sale between the parties is perverse and is liable to be set aside. The 1st substantial question of law is answered in favour of the appellant. 12. Having held that there was an agreement of sale between the parties, the next question to be considered is whether the appellant is entitled to the relief of specific performance. It is admitted by the appellant that he was informed about the order of O.P. Nos.274 and 274 of 1991 in February 1992 by the respondents 1 to 14 and from March 1992 the respondents 1 to 14 refused to receive the rent, immediately he filed R.C.O.P.No.1436 of 1992 for depositing the rent and in that petition a counter was filed by the respondents 1 to 14 in December 1992 stating that they had already sold the property to the 15th respondent. Therefore, in December 1992 the appellant was aware of the sale in favour of the 15th respondent and even thereafter no attept was made by the appellant to file a suit to enforce the oral agreement of sale between him and the respondents 1 to 14. Therefore, in December 1992 the appellant was aware of the sale in favour of the 15th respondent and even thereafter no attept was made by the appellant to file a suit to enforce the oral agreement of sale between him and the respondents 1 to 14. Admittedly, the suit was filed only on 4.1.1994 and explanation given by the appellant was that after seeing the counter in R.C.O.P. No.1436 of 1992 he made enquiries about the sale and he was able to get the particulars of the purchaser namely the 15th respondent only in December 1993 and after getting the registration copy of the sale deed he got the full particulars of the 15th respondent and thereafter filed the suit for specific performance and there was no delay. Even though time is not the essence of contract in respect of immovable property in a suit for specific performance the conduct of the parties is relevant to consider whether the parties are entitled to the discretionary relief of specific performance. Further, it has been held by the Hon'ble Supreme Court that even though as per the contract between the parties the defendants are bound to execute the sale deed in favour of the plaintiff, the Court need not decree the suit filed for specific performance if the conduct of the parties is otherwise or having regard to the provisions of Section 20 of the Specific Relief Act, the plaintiff is not entitled to the relief of specific performance. Therefore, we will have to see whether the discretionary relief of specific performance can be granted in favour of the appellant / plaintiff. 13. As stated supra, even after coming to know of the order passed in O.P. Nos.274 and 275 of 1991 no attempt was made by the appellant by offering the sale consideration to the respondents 1 to 14 and demanded the execution of sale deed. Even after the respondents 1 to 14 refused to receive the rent, no attempt was made by the appellant to make enquiries or sent notice calling upon the respondents 1 to 14 to execute the sale deed as per the agreement between the parties. Though it was contended by the 15th respondent that he issued notice to the appellant on 1.4.1992 informing about his purchase, no materials were placed before the Court to prove the same. Though it was contended by the 15th respondent that he issued notice to the appellant on 1.4.1992 informing about his purchase, no materials were placed before the Court to prove the same. Therefore, the case of the 15th respondent that he informed the appellant about the sale cannot be accepted. Nevertheless, having regard to the conduct of the appellant in keeping quiet for nearly two years from the date of knowledge of the order passed in O.P. Nos. 274 and 275 of 1991 without offering to pay the sale consideration requesting the respondents 1 to 14 to sell the property, it would disentitle the appellant/ plaintiff from claiming the relief of specific performance. Further, having regard to the allegations made in O.P. Nos.274 and 274 of 1991 it is made clear that the respondents 1 to 14 wanted to sell the property only for the purpose of getting more income. It has been stated specifically in the petition that the property can be sold for a sum of Rs.6,16,000/- and if invested in a Bank or securities they will get 12% interest and they are getting a megre sum as rent from the tenants and therefore only for the purpose of getting more income from that property they agreed to sell the property and applied for permission. Therefore, when the respondents 1 to 14 wanted to sell the property for the purpose of getting more income and that was also known to the appellant, the appellant ought to have acted immediately on coming to know of the order passed in O.P. Nos.274 and 275 of 1991 and offered to pay his share of sale consideration and requested the respondents 1 to 14 to sell the property. Even assuming that no proof was adduced by the respondents 1 to 14 and 15th respondent that they offered to sell the property to the appellant/ plaintiff after getting permission, having regard to the fact that the appellant/ plaintiff wanted to enforce the contract for sale, he ought to have been vigilant and diligent in approaching the respondents 1 to 14 by offering the sale consideration especially when the respondents 1 to 14 wanted to sell the property only to get more income. Therefore, the conduct of the appellant in not offering the sale consideration immediately on coming to know of the order passed in O.P. Nos.274 and 275 of 1991 and even after coming to know that the property was sold to the 15th respondent on seeing the counter filed by the respondents 1 to 14 would make it clear that the appellant was not ready and willing to perform his part of the contract and he was not diligent to offer the balance sale consideration and hence he is not entitled to the discretionary relief of specific performance. 14. In similar circumstances the Judgement reported in 2011 (4) CTC, 640(SC) (Saradamani Kandappan Vs. S.Rajalakshmi and others), the Hon'ble Supreme Court held as follows: "The legal position is clear from the decision of a Constitution Bench of this Court in Chand Rani v. Kamal Rani, 1993 (1) SCC 519 , wherein this Court outlined the principle thus: "It is a well accepted principle that in the case of sale of imovable property, 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." Relying upon the earlier decisions of this Court in Gomathinayagam Pillai v. Pallaniswami Nadar, 1967 (1) SCR 227 ,and Govind Prasad Chaturvedi v. Hari Dutt Shastri, 1977 (2) SCC 539 , this Court further held that 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. Where the contract relates to sale of immovable property, it wll normally be persumed that the time is not the essence of the contract. Where the contract relates to sale of immovable property, it wll normally be persumed that the time is not the essence of the contract. Thereafter, this Court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time: (i) From the express terms of the contract; (ii) From the nature of the property; and (iii) From the surrounding circumstances as for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land. In Chand Rani, Clause (1) of the Agreement of Sale required the balance consideration to be paid as under: "Rs.98,000/- will be paid by the second party to the first party within a period of ten days only and the balance Rs.50,000/- at the time of registration of the Sale Deed...". This Court held that time regarding payment of Rs.98,000/-was the essence, on the following reasoning: "The analysis of evidence would also point out that the Plaintif was not willing to pay this amount unless vacant delivery of possession of one room on the ground floor was given. In cross-examination it was deposed that since Income-tax Clearance Certificate had not been obtained the sum of Rs.98,000/-was not paid. Unless the property was redeemed the payment would not be made. If this was the attitude it is clear that the Plaintiff was insisting upon delivery of possession as a condition precedent for making this payment. The Income-tax Certificate was necessary only for completion of sale. We are unable to see how these obligations on the part of the Defendant could be insisted upon for payment of Rs.98,000/-. Therefore, we conclude that though as a general proposition of law time is not the essence of the contract in the case of a sale of immovable property yet the parties intended to make time as the essence under Clause (1) of the suit agreement." The intention to make time stipulated for payment of balance consideration will be considered to be essence of the contract where such intention is evident from the express terms or the circumstances necessitating the sale, set out in the agreement. If for example, the vendor discloses in the Agreement of Sale, the reason for the sale and the reason for stipulating that time prescribed for payment to be the essence of the contract, that is, say, need to repay a particular loan before a particular date, or to meet an urgent time bound need (say medical or educational expenses of a family member) time stipulated for payment will be considered to be the essence. Even if the urgent need for the money within the specified time is not set out, if the words used clearly show an intention of the parties to make time the essence of the contract, with reference to payment, time will be held to be the essence of the contract." 15. In this case also as stated supra, the respondents 1 to 14 wanted to sell the properties to get more income by depositing the sale proceeds invesetment and the appellant was also aware of the same. Hence, it can be construed that the parties were aware that time was the essence of contract and the appellant not having approached the respondents 1 to 14 on coming to know of the permission obtained by the respondents 1 to 14 to sell the properties, is not entitled to the relief of specific peformance. 16. Further, as per Section 16(c) of the Specific Relief Act that the plaintiff must always be ready and willing to perform his part of the contract. Though necessary averment has been made in Para 7 of the plaint, the appellant/ plaintiff failed to prove that he was ready and willing to perform his part of the contract after coming to know of the order passed in O.P. Nos.274 and 275 of 1991 and after the respondents 1 to 14 refused to receive the rent. Therefore, in my opinion, the appellant failed to prove his readiness and willingness to perform his part of the contract and he did not offer the sale consideration immediately after knowing the order passed in O.P. Nos. 274 and 275 of 1991 and further though time is not an essence of contract in respect of immovable property having regard to the allegations made in O.P. Nos. 274 and 275 of 1991 and further though time is not an essence of contract in respect of immovable property having regard to the allegations made in O.P. Nos. 274 and 275 of 1991 and admitted that the respondents 1 to 14 wanted to sell the property for getting more income by canvassed the property in proper security and they are getting lessor income by way of rent time must have been agreed as an essence of contact and the appellant ought to have approched the respondents 1 to 14 within a reasonable period and in this case after twenty months the suit was filed and no explanation has been given for the delay. The reason stated that he searched for the particulars about the 15th respondent and only after getting the certified copy he was able to get the correct particulars of the 15th respondent and thereafter filed the suit cannot be accepted. According to the appellant, the agreement of sale was between himself and the respondents 1 to 14 and even assuming that he was not aware of the sale in favour of the 15th respondent nothing prevented the appellant in filing the suit against the respondents 1 to 14 for specific performance. He need not have waited to collect the particulars of the purchaser and he would have filed the suit for specific performance immediately on coming to know that the permission was granted to sell the property. 17. Under Section 20 of the Specific Relief Act, the jurisdiction of the Court to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so. Further, as per Section 20(2)(b) of the Specific Relief Act, the Court may exercise discretion not to decree specific performance where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff and as per Explanation (2) the hardship must have resulted from any act of the plaintiff subsequent to the contract with reference to the circumstances existing at the time of the contract. 18. 18. As stated supra, the respondents 1 to 14 wanted to sell the property only for the purpose of getting more income and therefore they would have expected the plaintiff to pay the consideration immediately on coming to know of the order passed in O.P. Nos. 274 and 275 of 1991 and no attempt was made by the appellant/ plaintiff to offer the sale consideration and therefore by reason of the conduct of the appellant/ plaintiff the respondents 1 to 14 were losing higher income from the property and by denying the relief of specific performance no hardship would be caused to the plaintiff/ appellant as he has not given any substantial amount and he continues to remain in possession of the property by paying rent. Therefore, having regard to the provision of Section 20(2) of the Specific Relief At, in my opinion, the discretionary relief of specific performance cannot be given in favour of the appellant/ plaintiff. Hence, the substantial questions of law 1 and 3 are answered against the appellant/ plaintiff and though I hold that there was an oral agreement between the parties, having regard to the conduct of the appellant in not taking steps to enforce the contract and as the appellant was guilty of laches and the property was already sold to the 15th respondent, the appellant is not entitled to the discretionary relief of specific performance. 19. Hence, the orders of the Courts below are confirmed and the Second Appeal is dismissed. No costs. Consequently, the connected Civil Miscellaneous Petition is closed.