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2014 DIGILAW 3181 (MAD)

Nanjachary v. P. Chennaveerachari

2014-09-09

PUSHPA SATHYANARAYANA

body2014
Judgment : 1. This second appeal is filed by the plaintiff inveighing the judgement and decree dated 27.9.2005 passed by the Principal District Judge, Dharmapuri at Krishnagiri, in A.S. No. 66 of 2004 wherein and by which the judgment and decree dated 31.12.2003 recorded in O.S. No. 173 of 1998 on the file of the Subordinate Judge, Hosur, were reversed allowing the First Appeal at the instance of the defendants. 2. The plaintiff has filed the suit for direction to the defendants to execute the deed of conveyance regarding the suit property as per the agreement of sale dated 23.02.1993 within a specified time. 3. The case of the plaintiff is that the defendants 1 and 2 had jointly agreed to sell the suit property, which is a house site measuring 80' East “West and 40' North” South with Mangalore tiled house in Andevanapalli Village and accordingly, entered into an agreement of sale on 23.02.1993 for a sum of Rs. 32,000/-. It is stated that at the time of agreement, the plaintiff paid a sum of Rs. 5,000/- towards advance for sale consideration. The agreement was reduced to writing fixing the time for performance of the agreement as six months. It is alleged by the plaintiff that on 16.02.1983, the defendants 1 and 2 received a sum of Rs. 1,250/- from him and put him in possession of the suit property and executed a Muchalika as per which, the plaintiff will be in possession of the suit property for a period of three years within which time, the defendants have to repay the sum borrowed and take back the possession. It is further alleged that the defendants had not taken any steps to repay the amount and take back possession. In the meanwhile, after agreeing to sell the property to the plaintiff, the defendants had with an intention to defraud the plaintiff, wanted to sell the suit property in favour of the third defendant. Therefore, the plaintiff was constrained to give a representation to the Sub-Registrar, Denkanikotta, not to register any sale deed with respect to the suit property. In the meanwhile, after agreeing to sell the property to the plaintiff, the defendants had with an intention to defraud the plaintiff, wanted to sell the suit property in favour of the third defendant. Therefore, the plaintiff was constrained to give a representation to the Sub-Registrar, Denkanikotta, not to register any sale deed with respect to the suit property. The further allegation of the plaintiff is that inspite of his several attempts calling upon the defendants 1 and 2 to execute the sale deed in his favour, they had not heeded to his request and that though he was ready and willing to perform his part of the agreement, the defendants were evading the same. It is stated that the third defendant, who is the daughter of the first defendant, had trespassed into the suit property when the plaintiff was away from his house one year prior to the filing of the suit. Hence, the plaintiff filed the suit for specific performance. 4. Resisting the suit, the first defendant filed written statement adopted by the defendants 2 and 3. The statement of the plaintiff that the defendants 1 and 2 agreed to sell the suit property for a sum of Rs.32,000/- and execution of sale agreement on 23.02.1993 as well as receipt of Rs.5,000/- as advance were all accepted by the defendants. According to the defendants, the sale agreement specifically mentions that time is the essence of the contract and as they were in dire need of money, they agreed to sell the property to the plaintiff and fixed the time of six months to receive the balance of sale consideration. It was also agreed in the agreement that if the plaintiff failed to pay the balance of amount and get the sale executed, the advance amount would be forfeited. The allegation made by the plaintiff that the suit property was given in his possession was specifically denied by the defendants. The defendants also denied the alleged Muchalika dated 16.02.1983 executed in favour of the plaintiff after receiving a sum of Rs. 1,250/-. The other allegations, viz., objection given before the Sub-Registrar and that the defendants were making attempts to alienate the property, were all denied by them. As time was the essence of the contract, which was not kept up by the plaintiff, the defendants prayed for dismissal of the suit. 5. 1,250/-. The other allegations, viz., objection given before the Sub-Registrar and that the defendants were making attempts to alienate the property, were all denied by them. As time was the essence of the contract, which was not kept up by the plaintiff, the defendants prayed for dismissal of the suit. 5. Before the trial Court, the plaintiff besides examining himself as P.W.1, examined two more witnesses as P.W.2 and P.W.3 and marked Exs. A.1 to A.8. On the side of the defendants, the defendants 1 and 3 examined themselves as D.W.1 and D.W.2 respectively and marked Exs. B.1 and B.2. 6. The trial Court / learned Subordinate Judge, Hosur, on consideration of the evidence adduced and the materials available thereon, decreed the suit as prayed for. Challenging the same, the defendants preferred appeal in A.S. No. 66 of 2004. The Lower Appellate Court, after appreciating the facts, reversed the judgment of the trial Court and allowed the appeal dismissing the suit. Feeling aggrieved, the plaintiff has come up with this Appeal. 7. At the time of admission of this appeal, this Court formulated the following substantial question of law for consideration :- “When it is not a condition precedent to deposit the balance consideration at the time of filing the suit for specific performance, whether the Court below is correct in drawing an adverse inference for not depositing the balance amount at the time of filing the suit for specific performance by the plaintiff?” 8. Heard the learned counsel appearing for the parties and perused the records. 9. From the materials available on record, it is seen that the plaintiff has filed the suit based on Ex. A.1, which is an agreement dated 23.02.1993 entered into between himself and the defendants 1 and 2, as per which the defendants 1 and 2 had received a sum of Rs.5,000/- as advance and the plaintiff had agreed to pay the balance of Rs. 27,000/- within a period of six months after the payment of which, the defendants 1 and 2 have to execute the sale deed and the get it registered in the name of the plaintiff. It was further agreed in Ex. A.1 that in case of default by the defendants 1 and 2 to execute the sale deed, it was open to the plaintiff to deposit the balance of sale consideration into the Court and take legal action against them. It was further agreed in Ex. A.1 that in case of default by the defendants 1 and 2 to execute the sale deed, it was open to the plaintiff to deposit the balance of sale consideration into the Court and take legal action against them. Though in normal circumstances, it is not mandatory to the plaintiff in a suit for specific performance to deposit the balance of sale consideration into the Court as a condition precedent to file suit, if the parties have specifically agreed to do so, it mandates the party agreeing to comply with the said condition. However, whether time is the essence of contract has to be decided enforcing the above said term of agreement. Though in normal circumstances, insofar as the immovable properties are concerned, time is not the essence of contract, the defendants have specifically agreed to get the sale executed in favour of the plaintiff within six months. The time will be the essence only with regard to payment of sale price depending upon the terms of the agreement. 10. In this regard, it would be useful to refer to the specific recitals in Ex. A.1 and the relevant passage reads as follows :- “TAMIL” 11. From a reading of the above recital found in Ex. A.1, it is clear that the defendants 1 and 2 have been in dire need of money and the intention of the defendants can also be gathered that time is the essence of contract. Ex. A.1 has further specified that in the event of the defendants not coming forth with the execution, it was open to the plaintiff to deposit the balance of sale consideration into the Court and get the sale executed through Court. The above said clause is introduced in the agreement to make the intention of parties that time is the essence of the agreement. Despite the specific recital, if it was not the intention, the same could have been rebutted by the defendants 1 and 2. But in Ex. A.1, the forfeiture clause of the advance amount paid is not incorporated. Therefore, a collective reading of the terms in Ex. A.1 makes it clear that the defendants 1 and 2 were in need of money for which reason they entered into the contract with the plaintiff to sell the suit property. 12. But in Ex. A.1, the forfeiture clause of the advance amount paid is not incorporated. Therefore, a collective reading of the terms in Ex. A.1 makes it clear that the defendants 1 and 2 were in need of money for which reason they entered into the contract with the plaintiff to sell the suit property. 12. The first defendant, who had examined himself as D.W.1 also has deposed that period of six months was prescribed only because he was in urgent need of money. The third defendant who has deposed as D.W.2, had also struck the same note with the first defendant that time is the essence of the contract as the decision to sell the house was to raise funds immediately. Even if the urgent need for money within the specified time does not set out, the words clearly show an intention of the parties to make time as the essence of contract with reference to payment and hence, time will be held to be the essence of contract. The plaintiff, who has examined himself as P.W.1, in his cross-examination also, has specifically admitted that defendants 1 and 2 agreed to sell the property only for their urgent needs and the time limit of six months was specified. P.W.2 one Rangachari, who is the witness in Ex. A.1 has pleaded ignorance about time frame mentioned in Ex. A.1. Even P.W.3 has accepted the fact that the defendants have come forward to sell the property only for the educational expenses of their son and for purchase of house. 13. No doubt, it is true, that the defendants have not sent any notice to the plaintiff on the expiry of six months period in Ex. A.1 by terminating the agreement or their intention to forfeit the advance amount paid. The plaintiff also has not sent any notice expressing his readiness and willingness to perform his part of the agreement and calling upon the defendants to execute the sale deed in his favour. Instead, on a mere surmise the plaintiff has given a complaint before the Sub-Registrar, Denkanikottai, on 07.4.1995. The Sub-Registrar also had, in his proceedings under Ex. A.3 dated 10.4.1995, had rejected the representation from the plaintiff directing him to resort to legal remedy. Even after the proceedings of the Sub-Registrar under Ex. A.3, the plaintiff has come forward with the suit only on 19.7.1996. The Sub-Registrar also had, in his proceedings under Ex. A.3 dated 10.4.1995, had rejected the representation from the plaintiff directing him to resort to legal remedy. Even after the proceedings of the Sub-Registrar under Ex. A.3, the plaintiff has come forward with the suit only on 19.7.1996. Inspite of the above mentioned facts, the Lower Appellate Court held that the transaction in issue, being the sale of immovable property, time is not the essence of the contract. 14. In this regard, it is relevant to advert of the Hon'ble Supreme Court in Saradamani Kandappan vs. S. Rajalakshmi and others [ 2011 (12) SCC 18 ] wherein in paragraphs 23 and 28, it has been observed as follows :- Para 23: “The above section deals with the effect of failure to perform at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract.” Para 28: “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.” In view of the above decision, it is clear that time is the essence of contract insofar as the sale price is concerned if not for the execution of the sale deed. 15. Further, the relief of specific performance being an equitable relief, it is the discretion of the Court in the light of the facts and circumstances of the case either to refuse or grant the relief of specific performance. At the same time, it could not be lost sight of that the discretion exercised by the Court should not be arbitrary but should be based on sound judicial principles coupled with the intention of the parties. 16. In the instant case, the plaintiff has taken unfair advantage of his position to compel the defendants 1 and 2 to sell the suit property to him under Ex. A.1. When time is the essence of agreement insofar as the sale price is concerned as held above, the delay on the part of the plaintiff in not performing his part of the contract and taking advantage of his own wrong cannot be permitted. The plaintiff has not established that he was ready and willing to perform his part of contract within the time stipulated. It was not the case of the plaintiff that he was ready with the money and that the defendants were evading the same. The plaintiff, who comes to the Court for the grant of equitable relief of specific performance, has to establish his readiness and willingness throughout from the date of agreement till the date of filing of the suit. It was not the case of the plaintiff that he was ready with the money and that the defendants were evading the same. The plaintiff, who comes to the Court for the grant of equitable relief of specific performance, has to establish his readiness and willingness throughout from the date of agreement till the date of filing of the suit. The plaintiff also had not taken steps to deposit the remaining sale consideration in to Court at the time of filing of the suit. When the defendants were in dire need of money, they had proposed to sell the property. In such circumstances, the plaintiff ought to have offered the money at the earliest or else, the purpose is lost. In these circumstances, it is safe to conclude that in the light of Section 16(c) of the Specific Relief Act, 1963, the plaintiff had not established his case that he was ready and willing to perform his part of contract even on the date of suit. The further conduct of the plaintiff by giving an objection before the Sub-Registrar instead of issuing a suit notice reveals the attitude of the plaintiff. Though the order of the Sub-Registrar was on 10.4.1995 directing him to resort to the Court of law, the suit has been filed 15 months thereafter on 19.7.1996 and the suit was taken to file only in the end of 1998. Therefore, having delayed beyond the period of limitation and having failed to establish his readiness and willingness throughout, the plaintiff cannot be entitled to a decree of specific performance. 17. While rejecting the suit filed by the plaintiff, the Lower Appellate Court had relied on K.S. Vidyanadam and others vs. Vairavan [ AIR 1997 SC 1751 ] which has been followed in 2011 (12) SCC 18 wherein paragraph 43 reads as follows :- Para 43 : “Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam (supra) : (i) Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. (ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was ready and willing” to perform his part of the contract. (ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was ready and willing” to perform his part of the contract. (iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also “frown” upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser.” In view of the principles laid down in the above decisions, in the considered opinion of this Court, the decision of the Lower Appellate Court is correct in refusing the decree for specific performance. As such, no question of law, much less, substantial question of law arises for consideration in this Appeal. In the result, the Second Appeal fails and the same stands dismissed confirming the judgment and decree dated 27.9.2005 passed by the Principal District Judge, Dharmapuri at Krishnagiri, in A.S. No. 66 of 2004. However, in the circumstances of the case, there shall be no order as to cost.