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Karnataka High Court · body

2013 DIGILAW 62 (KAR)

S. Kashinath v. Padmini Ramnath

2013-01-11

H.G.RAMESH

body2013
Judgment :- 1. This appeal is by the defendant challenging the judgment and decree passed by the 11th Additional City Civil Judge, Bangalore City, in OS No.11192/2006. 2. A suit for specific performance was filed by the plaintiff for purchasing the property, a commercial apartment/flat bearing No.S-112 (47/136) situated in the First Floor, South Block, Manipal Centre, Dickenson Road, Bangalore. It is stated that the plaintiff and the defendant are friends both in business transactions as well as in real life. According to the plaintiff, the defendant had agreed to sell the suit schedule property for a sale consideration of Rs.9,25,000/- out of which, the plaintiff had paid Rs.8,50,000/- at the time of agreement which was entered between the parties on 28.10.2004. The balance amount was to be paid at the time of registration subject to defendant furnishing necessary documents, for which the defendant also had agreed and to hand over the original title deeds and other tax paid receipts etc. During March 2005, the plaintiff had informed the defendant orally to come and execute the sale deed and also expressed his readiness and willingness to pay the remaining balance of Rs.75,000/- and sought for execution of the sale deed. Though it was assured by the defendant, he did not come forward. Even on request made by the plaintiff in the month of April 2005 to execute the sale deed by accepting the remaining sum of Rs.75,000/-, the defendant did not come forward to execute the sale deed. Thereafter, the plaintiff got issued legal notice in the month of June 2006 inspite of waiting for some time as the defendant was also a family friend of the plaintiff. Thereafter, the suit came to be filed. 3. According to the defendant’s written statement, while denying the said transaction, it is stated that the contract had lapsed by time and there was no cause of action. While admitting the friendship between them, it is also stated that the defendant was badly in need of funds for his business and wanting to dispose of the suit schedule property. However, he has denied the fact that the plaintiff has advanced the sale consideration, but admitted the agreement entered into on 28.10.2004. While admitting the friendship between them, it is also stated that the defendant was badly in need of funds for his business and wanting to dispose of the suit schedule property. However, he has denied the fact that the plaintiff has advanced the sale consideration, but admitted the agreement entered into on 28.10.2004. Further, it is also stated that the sale transactions was not for a sum Rs.9,25,000/- and it was Rs.9,75,000/-and that the defendant had all the relevant documents with him which was required to be registered. However, he has denied the stand of the plaintiff approaching to execute the sale deed by collecting the remaining amount of Rs.75,000/-either in March or April 2005. Rather, it is contended that, inspite of repeated request, the plaintiff did not come forward to pay the sale consideration and get the sale deed executed. After lapse of time, only during 2006, the plaintiff gave paper publication and filed suit. The defendant has not taken any financial assistance from the plaintiff. The payment of Rs.6,00,000/-from the plaintiff is entirely a different transaction and has nothing to do with the subject matter of the suit and urges various grounds, denying the contents of the suit filed by the plaintiff, he has sought for dismissal of the suit with cost of Rs.2,00,000/-. 4. Based on the pleadings, the trial Court framed as many as four issues for consideration. After recording the evidence and after hearing both the parties, the trial Court has ordered for specific performance directing the plaintiff to deposit the sale consideration of Rs.75,000/- within one month from the date of the judgment. Being aggrieved by the same, the defendant is before this Court in appeal. 5. Heard learned counsel for the appellant/defendant and learned counsel representing the plaintiff/respondent. 6. According to the learned counsel for the appellant, the plaintiff has committed the breach of contract. As per the decision of the Apex Court reported in (2011) 9 Supreme Court Cases 147 between Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates Private Limited and another, time was the essence of the contract and contended that, as per the terms of agreement the contract had to be completed within six months. As per the decision of the Apex Court reported in (2011) 9 Supreme Court Cases 147 between Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates Private Limited and another, time was the essence of the contract and contended that, as per the terms of agreement the contract had to be completed within six months. However, the plaintiff did not come forward to get the sale deed executed, rather he only approached during 2006, after lapse of nearly two years seeking for specific performance and also submitted that by her conduct, the plaintiff is not entitled for seeking specific performance and also subsequent to the filing of the suit, rather the plaintiff borrowed the amount from the defendant towards which document are also available. To demonstrate the same, certain documents are produced by the defendant, which have been admitted by plaintiff. Thus it is submitted that in the absence of timely approach, the plaintiff is not entitled for specific performance. 7. Per contra, learned counsel appearing for respondent has submitted that the conduct of the defendant demonstrates that he himself did not come forward to execute the sale deed inspite of repeated requests. He further submits that, the defendant is not ready and willing to execute the sale deed and a substantial amount of consideration has been received at the time of agreement. Despite repeated requests orally out of friendship that was there between the parties, the defendant did not come forward to execute the sale deed. The plaintiff was ever ready and willing to perform his part of the contract by paying a sum of Rs.75,000/-. Equity and also discretion lies in favour of the plaintiff. Time was not the essence of contract. Rather the plaintiff approached the defendant time and again and requested orally to perform his part of the contract. The trial Court, rightly having taken note of the conduct of the defendant, ordered for specific performance. The plaintiff also has deposited the remaining sale consideration before the Trial Court as ordered and there is no merit in the appeal. 8. In the light of the arguments advanced, the points that arise for consideration is: i) Whether the trial Court is justified in decreeing the suit for specific performance? ii) Whether the trial Court is justified in holding that the defendant has failed to establish that, there is breach of contract by plaintiff? (iii) What order? 9. 8. In the light of the arguments advanced, the points that arise for consideration is: i) Whether the trial Court is justified in decreeing the suit for specific performance? ii) Whether the trial Court is justified in holding that the defendant has failed to establish that, there is breach of contract by plaintiff? (iii) What order? 9. The subject matter of the property is no doubt situated in the heart of the city at Bangalore. The transaction is entered into between the parties way back in the year 2005 with regard to sale of the property by the defendant in favour of the plaintiff for a sum of Rs.9,25,000/-. It is seen that as per the evidence on record, both the plaintiff and the defendant were family friends and also there was also business transactions between the defendant and the plaintiff. The defendant being a plywood dealer and plaintiff being a contractor, there were some monetary transactions also between them. 10. It appears, insofar as the agreement is concerned, it has been admitted by defendant that despite repeated requests the plaintiff did not come forward to get the sale executed on time as per the stipulation in the contract. Thus, insisting upon the time being the essence of contract, the defendant has contended that legal notice issued by the plaintiff after lapse of nearly 1 ½ years and after the period of contract/understanding entered into between the parties, the same cannot be looked into. 11. In the finding given by the trial Court with regard to breach of contract, it has opined that time is the essence of contract, and the amount agreed to be paid is Rs.9,25,000/-and not Rs.9,75,000/-. It is also the stand of the defendant that, the plaintiff had no source with her to pay Rs.75,000/- to show readiness and willingness to perform her part of the contract. It is also the stand of the defendant that there are no material placed by the plaintiff to demonstrate his financial capacity to pay the remaining balance consideration and some of the documents produced by the plaintiff was not sufficient to demonstrate the readiness and willingness on the part of the plaintiff. Rather certain documents produced by the defendant were sufficient to indicate that the plaintiff had no financial source to pay the remaining balance of Rs.75,000/-. 12. Rather certain documents produced by the defendant were sufficient to indicate that the plaintiff had no financial source to pay the remaining balance of Rs.75,000/-. 12. On the issue of readiness and willingness to pay the remaining sale consideration, the trial Court, after going through various documents produced by the defendant, has opined that, although the plaintiff has not produced any documents to show that she was not having sufficient source of income to pay the balance sale consideration and that the husband of the plaintiff and defendant were helping each other during crisis, it has taken into consideration that the husband of the plaintiff has paid an amount of Rs.6,00,000/- to the defendant towards discharge of some outstanding dues by way of cheques and that itself demonstrate that the plaintiff and her husband had the financial capacity to make the payment of remaining balance consideration. The trial Court has also referred to the decision of the Apex Court reported in AIR 2000 Supreme Court 2408 between Motilal Jain v. Smt.Ramdasi Devi and others, wherein the Apex Court has laid down the principle that, in order to demonstrate readiness and willingness for specific performance – plea need not be in the specific phraseology or language and the conduct and the background of the party would be sufficient to interfere the same. Having relied upon the said judgment referring to Section 16(c) of the Specific Relief Act, the trial Court has opined that the plaintiff has paid more than 90% of the sale consideration and only 10% of the sale consideration was to be paid, as such the defense of the defendant cannot be accepted and that the plaintiff was ready and willing to perform her part of the contract and also that the plaintiff has the financial capacity to pay the remaining balance. 13. 13. As rightly held by the trial Court, the very transaction between the plaintiff and the defendant and some of the transactions like borrowing and lending in times of difficulties between the parties, would demonstrate that the plaintiff had the capacity to pay the remaining balance, much less also she was ready and willing to perform her part of the contract, as such the trial Court having noted that the plaintiff has already paid the substantial amount of Rs.8,25,000/- to the plaintiff, has ordered specific performance having opined that if the suit is dismissed, the plaintiff would be put to hardship decreed suit. 14. So far as the stand of the defendant/appellant, insisting upon this Court to allow the appeal on the ground that time was the essence of the contract and that the plaintiff has committed breach of contract in not getting the sale deed executed by paying balance consideration in time, shows the conduct of the defendant himself that after entering into the contract, he was not ready, as part of the obligation, to execute the sale deed. Further, a substantial amount of Rs.8,25,000/- has been received and the remaining amount was only Rs.75,000/-. Further, it is seen that from 2004 till 2012, the defendant/appellant is being receiving the rentals from the building, which is the subject matter of the suit and also he is monetarily benefited. In that view of the matter, the plaintiff would be put to hardship in the event the appeal is allowed and the defendant is allowed to go scot-free. There are facts and circumstances which do favour the plaintiff rather than the defendant. While exercising the discretion, if specific performance is ordered no hardship would be caused to the defendant. In the decision of the Apex Court in Citadel Fine Pharmaceuticals case relied on by the counsel, it is held, time is not normally essence of contract. However, this is not an absolute proposition and has several exceptions. In the said case, plaintiff purchaser/developer had willingly incurred obligation to obtain necessary clearance within the stipulated time. Having found that, it is commercial transaction, Court was inclined to hold time is the essence of contract. (The said stipulation is the background of commercial transaction). However, this is not an absolute proposition and has several exceptions. In the said case, plaintiff purchaser/developer had willingly incurred obligation to obtain necessary clearance within the stipulated time. Having found that, it is commercial transaction, Court was inclined to hold time is the essence of contract. (The said stipulation is the background of commercial transaction). However, in the case on hand, 90% of the amount was paid by the plaintiff to the defendant, it appears that, by conduct defendant having later found that the escalation in the market, despite several oral request made by plaintiff, did not come forward to execute the sale deed. He raised the defence that, time is essence of contract belatedly even without issuing legal notice on the plaintiff terminating contract, in the fact situation, defence of time is essence of contract, in the fact situation, defence of time is essence of contract can’t be allowed to be set up by the defendant, that too when he has received 90% of the sale consideration. As such above ruling is not applicable to the fact situation. 15. In the context, insofar as escalation of the value is concerned, the plaintiff had paid substantial consideration and equity is in favour of the plaintiff than the defendant. After entering into the contract, from 2004 till 2013, the defendant had enjoyed and used the property. In the circumstance, at this point of time, there is no justification to negate the finding of the trial Court, as it has taken into consideration all the relevant facts of the case while ordering for specific performance. However, to favour the appellant/ defendant, whatever the rental amount has been collected from the building could be allowed in favour of the defendant and there is no need to return the money to the plaintiff. Since balance amount of Rs.75,000/- is said to have been deposited before the trial Court by the plaintiff, the appellant/defendant to execute the sale deed within three months in favour of the plaintiff failing which, it is for the Registry of the trial Court to execute the sale deed in favour of the plaintiff as ordered by the trial Court, However, the only solace for the defendant/appellant herein is, the amount so far collected by him by way of rentals would be appropriated by him. Parties to bear their own costs. Appeal is dismissed.