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2014 DIGILAW 499 (KER)

Lakshmi Amma v. Rajan

2014-07-01

P.BHAVADASAN

body2014
JUDGMENT : P. Bhavadasan, J. The defendants in O.S.No.558/2008 who have suffered a decree for specific performance at the hands of the Trial Court which was confirmed in appeal are the appellants before this Court. Most of the facts are not in dispute. 2. The plaintiff in the suit entered into an agreement for sale of 10.5 cents of land at the rate of Rs.18,500/- per cent on 15.05.2008 and paid Rs.25,000/- as advance on the very same date. The period fixed for execution of the sale deed was four months from the date of the agreement. It is not in dispute that the property intended to be sold to the plaintiff forms a portion of a larger extent. It is also not in dispute that a further sum of Rs.25,000/- was received on 20.08.2008 by the vendors. The period for payment of sale consideration and the consequent execution of sale deed expired on 14.09.2008. Immediately thereafter it is admitted that notice has been issued by the plaintiff calling upon the defendants to execute the sale deed. In the affidavit in chief filed by the plaintiff, it is admitted by the plaintiff that reply notice was sent containing untenable contentions. Therefore, suit was laid. 3. The defendants resisted the suit. They as usual raised all possible contentions i.e., that time is the essence of contract, they were always ready and willing to perform their part of agreement and it was the plaintiff who had committed breach of contract and that the plaintiff was not entitled to get a decree for specific performance. They had also expressed their willingness to return the advance amount paid with interest. 4. The trial court raised necessary issues for consideration. The evidence consists of the testimony of P W1 and the documents marked as Exts. A1 to A7 from the side of the plaintiff. The defendant had DW1 examined. The trial court, on appreciation of the evidence, came to the following conclusion: i) Time is not the essence of contract. ii) The plaintiff was capable of raising necessary funds to pay the balance sale consideration. iii) It was the defendants who were not willing to perform their part of contract, iv) Discretionary relief is not available to the defendants. Based on the above findings, suit was decreed for specific performance. 5. ii) The plaintiff was capable of raising necessary funds to pay the balance sale consideration. iii) It was the defendants who were not willing to perform their part of contract, iv) Discretionary relief is not available to the defendants. Based on the above findings, suit was decreed for specific performance. 5. The disappointed defendants carried the matter in appeal as A.S.No. 165/2011 before the II Additional District Court, Kozhikode. The lower appellate court, on independent evaluation of the evidence, concurred with the trial court on finding of facts and dismissed the appeal. At the time of admitting the second appeal, the following substantial questions of law were formulated. (i) Did the courts below go wrong in holding that the plaintiff was ready and willing to perform his part of the contract when the evidence shows that he was not having sufficient fund to pay the balance consideration ? (ii) Did the appellate court go wrong in not placing reliance on the decision of the Apex Court in Mrs. Saradamani Kandappan v. Mrs. S. Rajutakshmi & Ors., 2011(3) KLTSN 43 (C.No.43) SC : AIR 2011 SC 3234 and that of this Court in Susheela (Died) & Ors. v. T.M. Muhammedkunhi 2012 (9) Lawdigital, in 718 (Kerala) (DB) : 2012(2) KLT Suppl. 64 (Ker.) : 2012(1) KHC 508 (DB). 6. Sri. T. Sethumadhavan, learned Senior Counsel appearing for the appellants contended that there has been a total mis-appreciation of evidence in the case and the relevant factors have not been taken note of by the courts below. Both the courts below seem to have placed considerable reliance on Exts.A3 and Ext.A4 which are the Pass Book and the statement of accounts of plaintiff in Bank which, the courts below felt, were sufficient to show that the plaintiff had necessary funds to pay sale consideration. Drawing attention of this Court to those documents, it is pointed out that as on the date on which the balance sale consideration had to be paid, there was no funds available in the account of the plaintiff and therefore the conclusion drawn by the courts below based on Exts.A3 and A4 cannot be sustained. That further shows that the plea of readiness and willingness pleaded by the plaintiff cannot have support of law. 7. That further shows that the plea of readiness and willingness pleaded by the plaintiff cannot have support of law. 7. For the above proposition, learned Senior Counsel for the appellants relied on the decision in Pramod Buildings and Developers Private Limited v. Shanta Chopra 2011(2) Apex Court Judgments 443 (S. C.) : 2011(2) KLT Suppl. 62 (SC): 2011(4) SCC 741 , According to the learned Senior Counsel, the plaintiff was well aware of the fact that the defendants were constrained to sell the property to raise funds for the construction of house by the 3rd defendant and therefore he was aware that time was the essence of contract. In spite of knowing the said fact, he kept quite till the period was over and thereafter issued notice to the defendants and initiated proceedings. It is a case where time is the essence of contract and therefore having failed to perform his part of contract, the plaintiff cannot be heard to say that he is entitled to a decree for specific performance. 8. For the above proposition, learned Senior Counsel for the appellants relied on the decisions in Mrs. Saradamani Kandappan v. Mrs. S. Rajalakshmi & Ors., 2011(3) ACJ 2011(3) KLTSN 43 (C No. 43) SC : AIR 2011 SC 3234 and in Susheela (Died) & Ors. v. T.M. Muhammedkunhi 2012(9) Lawdigital, in 718 (Kerala) (DB) : 2012(2) KLT Suppl. 64 (Ker.) : 2012(1) KHC 508 (D.B.). It is contended that assuming that there was readiness and willingness and also assuming that the plaintiff could raise necessary funds, still in the facts and circumstances of the case, the courts below should have considered the question of exercising the discretion under S.20 of the Specific Relief Act. The Trial Court makes only a passing reference to the said issue without considering the pros and cons or the advantage or disadvantage that the parties may derive by decree for specific performance. The Trial Court makes only a passing reference to the said issue without considering the pros and cons or the advantage or disadvantage that the parties may derive by decree for specific performance. The lower appellate court, according to the learned Senior Counsel, did not even bother to consider this issue at all Relying on the decision in Omana Mathai v. Joseph Easo, 2014(1) KLT 689 , learned Senior Counsel pointed out that in case where the courts below fail to consider the impact of S.20 of the Specific Relief Act then even assuming that the plaintiff is entitled to specific performance, judgment and decree passed without adverting to the applicability of S.20 of the Act is non-est in law. If that be so, the decree of the lower appellate court in the present case cannot stand. 9. Learned counsel appearing for the respondent, on the other hand, pointed out that the contention that time is the essence of contract cannot be invoked in the case on hand for the simple reason that the date of performance even according to the defendants was 14.09.2008 and soon after the expiry of the said date, notice has been sent calling upon the defendants to receive balance sale consideration and execute the sale deed. There may be cases where it is inequitable to grant specific performance like in case where specific performance is sought long after the time for performance has expired or subsequent events have occurred which un-justify granting of a decree for specific performance. No such contingency arises in the case oh hand. 10. Learned counsel appearing for the respondent went on to point out that Exts. A3 and A4 were produced to show that the plaintiff had capacity to raise funds. The plaintiff also produced Exts. A5 and A6 documents which, according to him, relate to properties belonging to him which could be used to raise funds to pay balance sale consideration. Learned counsel contended that it is well settled by now that it is not necessary that the plaintiff should have ready cash with him always and it is sufficient for him to show that he is capable of raising the requisite funds. It is idle for the appellants to contend that the plaintiff was not ready and willing to perform his part of contract. It is idle for the appellants to contend that the plaintiff was not ready and willing to perform his part of contract. Adverting to the facts of the case, it is pointed out that the date fixed for execution of the sale deed was on 14.09.2008 and it is significant to notice, according to the learned counsel, that the defendants did not feel it necessary to issue notice calling upon the plaintiff to be prepared to pay balance sale consideration and for getting the sale deed executed on the same date indicating time is the essence of the contract. If time being the essence of contract, they would have certainly issued a notice before the date for performance. On the other hand, it was the plaintiff who, immediately after the expiry of the date, issued notice calling upon the defendants to perform their part of contract. 1 laving thus shown his keenness to have the sale deed executed and also having shown that he has necessary capacity to raise funds, the appellants cannot be heard to say that there w as unwillingness on the part of the plaintiff to perform his part of contract. 11. As regards the question regarding application of S.20 of the Specific Relief Act, learned counsel for the respondent went on to point out that the decision relied on by the learned counsel for the appellants was in respect of an ex parte decree where without adverting to any material facts, the courts below simply went on to decree the suit for specific performance in favour of the plaintiff. It was in that context, the court had occasion to say that even in such a case, application of S .20 of the Specific Relief Act cannot be ruled out and the court has an obligation to ascertain whether it is proper and just to grant specific performance in such cases also. Learned counsel went on to point out that S.20 of the Act indicates the factors which are relevant for considering the discretion exercisable under S .20 of the Act and if those factors are taken note of, it can be seen that the decree passed is just and proper. Learned counsel went on to point out that S.20 of the Act indicates the factors which are relevant for considering the discretion exercisable under S .20 of the Act and if those factors are taken note of, it can be seen that the decree passed is just and proper. Finally, it is contended by the learned counsel for the respondent that all the findings namely, whether time is the essence of contract, readiness and willingness on the part of the plaintiff and also the discretion of S.20 of the Act are based on appreciation of evidence in the case and are questions of facts and no substantial question of law arises for consideration Accordingly, it is contended that the appeal may be dismissed. 12. Ext.A1 agreement is not disputed. It is also not disputed that the time for execution of sale deed was four months from the date of the agreement i .e. 15.05.2008 and if that be so, the balance sale consideration has to be paid and sale deed had to be executed on or before 14.09.2008. It is also not in dispute that at the time of execution, of sale deed, Rs.25,000/- was received by the vendor and a further amount of Rs.25,000/- was received on 20.08.2008. In the decision in Mrs. Saradamani Kandappan v. Mrs. S. Rajalakshmi & Ors., 2011(3) Apex Court Judgments 167 (S.C.) : 2011(3) KLT SN43 (C. No.43) SC : AIR 2011 SC 3234 , it was held as follows: "24. The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market value of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor-defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The assumption was that grant of specific performance would not prejudice the vendor-defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now." 13. In the decision in Susheela (Died) & Ors. v. T.M. Muhammedkunhi (2012)(9) Lawdigital, in 718 (Kerala) (DB) : 2012(2) KLT Suppl. 64 (Ker.) : 2012(1) KHC 508 (DB) it was held as follows: "12. Even though as per Article 54 of the Limitation Act, 1963 the period of limitation for instituting a suit for specific performance is three years, when the parties to the contract have consciously fixed a lesser period for performance of the contract, there is no reason why the said period is not honoured by the parties. That was precisely what K.S. Vidhyanadam (supra) emphasised and approvingly followed in Saradamani Kandappan (supra). We cannot also ignore the offer of Rs.9,60,000/- (Rupees nine lakhs sixty thousand only) made on behalf of the plaintiff to the appellants during the settlement talks pending this appeal and the disinclination of the appellants to accept the same. This tells upon the galloping of the land prices during this long 19 years. It will thus be grossly inequitable to hold that now after 19 years of the agreement the appellants/ defendants should be compelled to perform their obligations under Ext. A 1 on the ground that time was not the essence of the contract". 14. This tells upon the galloping of the land prices during this long 19 years. It will thus be grossly inequitable to hold that now after 19 years of the agreement the appellants/ defendants should be compelled to perform their obligations under Ext. A 1 on the ground that time was not the essence of the contract". 14. A reading of the above decisions shows that recently a significant departure has to be made regarding the principle that time is not the essence of contract. Considering the facts and circumstances and the current scenario of economy, the courts in those cases have taken the view that time is the essence of contract. On a careful reading of the above decision, it will be seen that ultimately the decision depends upon facts and circumstances of each case. There is no straight jacket formula to ascertain whether time is the essence of contract. It depends upon several factors. 15. In the case on hand, there is nothing to show that the plaintiff was made aware of the fact that the property was being sold for putting up of a house by the 3rd defendant and therefore, they were in dire need of money. A suggestion was put to PW 1 in his cross examination which he stoutly denied. It is significant to notice that there is no such recital in Ext.A1. It is also important to notice that if, as a matter of fact, it was for the purpose of construction of a house and he was in dire need of money, one would have expected the defendants to send notice to the plaintiff calling upon him to be prepared to pay the balance sale consideration and showing readiness and willingness on the part of the plaintiff to execute the sale deed. There was no such move from the defendants. Of course, Ext.A1 agreement does show that transaction is to be completed within four months but that is only a period fixed nominally and usually such stipulation does not take as time is essence of the contract. There are no compelling circumstances in this case unlike the decisions referred to above which would compel this Court to come to the conclusion that time is the essence of contract. At any rate, there was no specification by the defendants that time is treated to be the essence of contract. There are no compelling circumstances in this case unlike the decisions referred to above which would compel this Court to come to the conclusion that time is the essence of contract. At any rate, there was no specification by the defendants that time is treated to be the essence of contract. It is in this context, one has to view the conduct of the plaintiff. 16. The time fixed for completing the transaction expired on 14.09.2008. Immediately thereafter the plaintiff issued notice to the defendants calling upon them to execute the sale deed. It is not a case where there is considerable lapse of time from the expiry of date for execution of document and the date of resorting to proceedings by the plaintiff. This fact cannot be lost sight of. 17. There is nothing to indicate that the plaintiff was made aware or even the defendants themselves thought that time was the essence of contract. Had it been so, their conduct would have been different. Therefore, the reliance placed on the decisions referred to above to contend for the position that in ail cases time is the essence of contract cannot be countenanced. As already observed, each case depends upon its own facts. Normally, when there is some lethargy on the part of the plaintiff causing inconvenience or loss to the defendants, probably one could say that time is the essence of contract or when circumstances establish that it was made known to the vendee, the position may be different. But in a case where there is only casual stipulation of period for execution of document and when there is nothing more to show that either of the parties treated time as the essence of contract, the usual principle could apply. Of course, it is not to say that the plaintiff can try to enforce the agreement always he wishes. 18. Coming to the willingness on the part of the plaintiff to execute sale deed, reference is made to the lack of funds with the plaintiff by the appellants. Attack is made on Exts. A3 and A4 and it is contended that the courts below erred in law in accepting Exts. A3 and A4 as evidence of availability of funds with the plaintiff so as to inter readiness and willingness on his part of performance. Attack is made on Exts. A3 and A4 and it is contended that the courts below erred in law in accepting Exts. A3 and A4 as evidence of availability of funds with the plaintiff so as to inter readiness and willingness on his part of performance. The pointed contention is that perusal of those documents would show that on the crucial date i.e., on 14.09.2008, when balance due was Rs.1,44,250/- the entries in Exts.A3 and A4 hardly show more than Rs.2.000/- at the relevant time. 19. It is significant to notice that support is not drawn from Exts.A3 and A4 alone by the plaintiff to show that he had necessary funds. Exts.A3 and A4 are produced lo show that there was flow of funds into the account of the plaintiff. The purpose was not to contend that on 14.09.2008, he had funds in the account to pay balance sale consideration. He relies on Exts.A5 and A6 also which are two documents relating to immovable properties of the plaintiff. It is by now well settled that it is not necessary that the plaintiff should have liquid cash with him all throughout. It is sufficient if he succeeds in showing that he has the ability and capacity to raise funds. It is true that readiness and willingness on the part of the plaintiff should exist throughout i.e., right from the date on which the agreement is entered into and till the transaction is over. But that does not mean that he should carry liquid funds with him. Probably, the courts might have placed undue significance on Exts.A3 and A4. However, the courts below have rightly found that the plaintiff has potential, ability and capacity to raise funds since he owns immovable property. 20. There is no contention on behalf of the defendants that capable of generating funds for any reasons whatsoever. Probably, he may sell it or he may mortgage it for raising funds. It could not be said that he is incapable of raising funds. 21. Readiness in S. 16(c) of the Specific Relief Act refers to the financial capacity and willingness refers to the mental state of the plaintiff for seeking specific performance. It is true that merely stating that the plaintiff was always ready and willing to perform his part of contract will not satisfy the requirements. 21. Readiness in S. 16(c) of the Specific Relief Act refers to the financial capacity and willingness refers to the mental state of the plaintiff for seeking specific performance. It is true that merely stating that the plaintiff was always ready and willing to perform his part of contract will not satisfy the requirements. He has to show that he has necessary funds and he is inclined to go through the transaction. In the case on hand, he has adduced evidence to show that he has capacity to raise funds and by the prompt issuance of notice calling upon the defendants to execute sale deed, he has also shown his willingness to go through the transaction. Therefore, the contention that the element of readiness and willingness is lacking on the part of the plaintiff cannot stand. 22. Coming to the question of exercise of discretion under S.20 of the Specific Relief Act, true in the decision in Omana Mathai v. Joseph Easo, 2014(1) KLT 689 , this Court has gone to the extent of saying that it is a mandatory provision and it is obligatory on the part of the courts to consider the applicability of S.20 of the Act. A decision rendered without adverting to the applicability of S.20 of the Act, according to this Court, is non-est. 23. The above decision is highlighted by the appellants to contend for the position that in the case on hand, the trial court has made only a passing reference while the lower appellate court did not feel it necessary at all to consider the issue at all. It is therefore contended that the appellate judgment cannot stand and the matter may have to go back to the lower court for reconsideration of the issue. 24. No doubt, there is substance in the above contention. But one has to refer to S.20 of the Specific Relief Act also in this regard. S.20 of the Act gives indication of the factors which need to be taken note of while considering the discretion to be exercised under that provision. Well this Court is fully aware of the fact that the instances mentioned in S.20 of the Act are only illustrative and not exhaustive. There may be other circumstances or facts which may arise for consideration of discretion to be exercised under S.20 of the Act. Well this Court is fully aware of the fact that the instances mentioned in S.20 of the Act are only illustrative and not exhaustive. There may be other circumstances or facts which may arise for consideration of discretion to be exercised under S.20 of the Act. However, on a perusal of the evidence in the case, there seem s to be none of the factors made mention of in S.20 of the Act apply to the facts and circumstances to deny specific performance to the plaintiff. Of course, the lower appellate court should have considered more elaborately the evidence in the case so that this Court have scrutinised the exercise of the appellate power in that regard. But, merely because the appellate court did not elaborately advert to this fact may not by itself be a ground to set aside the decree when it is not shown that any unfair advantage has been obtained by the plaintiff. 25. The result is that, none of the grounds raised by the appellants can be sustained and the lower court has considered the matter elaborately and rightly granted a decree for specific performance. In the result, this appeal is without merits and it is liable to be dismissed. I do so. However, there will be no order as to costs.