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Karnataka High Court · body

2015 DIGILAW 324 (KAR)

V. P. Venkatesh v. G. Padmavathi

2015-03-24

ANAND BYRAREDDY

body2015
JUDGMENT : Heard the learned Counsel for the appellant and the learned Counsel for the respondent. 2. The appellant was the plaintiff before the trial court and had filed a suit for specific performance of contract. It was stated that the defendant was the absolute owner of a property bearing No.10/6, 6th Main, Magadi Road Chord Road, Corporation Division No.29, Govindarajanagar, Bangalore – 560 040, which was morefully described in the suit schedule. It was claimed that the defendant had need for money and therefore had approached the plaintiff and offered to sell the property and an agreement of sale was executed on 12.1.2000, under which the defendant had agreed to sell the suit property in favour of the plaintiff, for a sale consideration of Rs.4,50,000/. The defendant is also said to have received a sum of Rs.4,00,000/on the date of the agreement as advance sale consideration. The remaining amount of Rs.50,000/was to be paid at the time of execution of the sale deed, which was to be executed within three months from the date of the agreement, subject to the plaintiff paying the cost of registration and conveyance. It is claimed by the plaintiff that he was ready with the balance sale consideration of Rs.50,000/and a substantial part of the sale price had been paid in advance under the agreement of sale. However, the defendant did not come forward to complete the transaction after expiry of three months from the date of the agreement. Therefore, the plaintiff was constrained to issue a notice dated 8.5.2000, calling upon the defendant to execute a registered sale deed and that the plaintiff was ready to pay the remaining amount of Rs.50,000/. The defendant had received the notice sent under certificate of posting, but refused to receive the notice sent under registered post. Thereafter, the defendant is said to have personally met the plaintiff and requested him to wait for another six months as she was unable to shift from the suit property immediately. The plaintiff, out of kindness, had believed the words of the defendant and had conceded that he would wait for six months. Thereafter, the plaintiff again approached the defendant after the expiry of six months, to call upon the defendant to execute the sale deed. The plaintiff, out of kindness, had believed the words of the defendant and had conceded that he would wait for six months. Thereafter, the plaintiff again approached the defendant after the expiry of six months, to call upon the defendant to execute the sale deed. The defendant had again pleaded that she was unable to secure alternative accommodation and requested the plaintiff to bear with her for some more time. The plaintiff again proceeded to defend in good faith and waited till the month of December 2002. The defendant thereafter having failed to keep her word to execute the sale deed, had made a demand for an additional sum of Rs.2,50,000/. This, according to the plaintiff, was an unlawful demand and therefore proceeded to file the suit. It was the case of the plaintiff that in the expectation of the purchase of the suit property, the plaintiff had sold the other property which belonged to him and therefore, it was imperative that the suit be decreed for specific performance, as he had no roof over. And accordingly had filed the suit. The defendant, on entering appearance, had filed a written statement to deny the very execution of the agreement and claimed that there was indeed a need for money and she had borrowed a sum of Rs.4,00,000/and that there was no agreement to sell the suit property and the defendant had only borrowed money from one Veerannagowda, who had arranged finances and the agreement was a false document set up by the plaintiff. In the light of the blank denial of the plaint averments, the court below had framed the following issues: “1. Whether the plaintiff proves that he entered into agreement of sale dated 12.1.2000 pertaining to the suit schedule property? 2. Whether the plaintiff proves that he paid a sum of Rs.4,00,000/to the defendant at the time of agreement towards sale consideration? 3. Whether the defendant proves that agreement of sale dated 12.1.2000 is forged and fabricated document? 4. Whether the plaintiff proves that he was ready and willing to perform his part of contract under obligation? 5. Whether the plaintiff is entitled for the relief of specific performance and possession as sought for?” The court below has answered issues 1 and 2 in the affirmative and other issues in the negative and dismissed the suit. It is that which is under challenge in the present appeal. 3. 5. Whether the plaintiff is entitled for the relief of specific performance and possession as sought for?” The court below has answered issues 1 and 2 in the affirmative and other issues in the negative and dismissed the suit. It is that which is under challenge in the present appeal. 3. The learned Counsel for the appellant would contend that the court below has indeed found in favour of the plaintiff insofar as the execution of the agreement of sale is concerned. It was also accepted by the trial corut that the plaintiff had paid a sum of Rs.4,00,000/as advance to the defendant under an agreement of sale dated 12.1.2000. It is therefore unclear and inexplicable that the court below had then proceeded to hold that the plaintiff was required to have the sale deed executed within three months from the date of the agreement and since the date had expired on 12.4.2000, no steps were taken to institute the suit and even the notice calling upon the defendant to execute the sale deed had been issued much after 12.4.2000 and the notice having been issued on 8.5.2000, there was initial delay and to compound the delay in initiating appropriate action, the suit was filed on 31.1.2003. Therefore, the court below having concluded that the plaintiff was not ready and willing to perform his part of the contract, is not in accordance with the settled principles of law. It is pointed out that a substantial amount amounting to 90% of the sale consideration, was paid as advance under the agreement of sale itself. The remaining amount was only Rs.50,000/which the plaintiff was ready and willing to pay even as on the date of the agreement. IT was at the request of the defendant that it was postponed by three months and hence the finding of the court that the plaintiff was not ready and willing is not with reference to any circumstance, which can be taken into consideration from the sequence of events. Secondly, it is pointed out that it is the settled principle by the line of decision of the courts in India that in an agreement of sale in respect of immovable properties, time is not of the essence of the contract unless it is otherwise specifically agreed. Secondly, it is pointed out that it is the settled principle by the line of decision of the courts in India that in an agreement of sale in respect of immovable properties, time is not of the essence of the contract unless it is otherwise specifically agreed. Though it was agreed in the present case on hand that the sale transaction would be completed within three months from the date of agreement, it was the refusal and reluctance on the part of the defendant, which postponed the transaction and further since the defendant sought time on humanitarian grounds, the plaintiff having afforded time to the defendant to vacate the premises and complete the sale transaction, could not be attributed to the plaintiff as having not indicated that he was ready and willing to perform his part of the contract. This reasoning of the court below cannot be sustained as it is wholly inconsistent with the actual circumstances. Further, the trial court having held that the plaintiff was not entitled to the relief of specific performance with reference to the hardship that may be caused to the defendant was not also tenable, as the written statement did not contain any such pleading of such hardship. Since the defendant had stoically denied the very execution of the agreement of sale, the question of the defendant pleading or establishing hardship in the performance of the contract could not have been assumed by the court below. The learned counsel would also point out that when a substantial part of the price has been paid under the agreement itself, and the remaining amount being relatively a small portion of the sale consideration, it could not be said that there was no readiness and willingness on the part of the plaintiff in performing his part of the contract. There are decisions of the apex court in this regard wherein it is held that when a substantial amount of the sale price has been paid, the question of there being absence of readiness and willingness cannot be presumed. On the other hand, it should be presumed that the plaintiff was ready and willing. And hence the learned Counsel has placed reliance on several decisions of the Supreme Court as well as this court to contend that the court below was not justified in negating the suit relief in the face of the established circumstances. On the other hand, it should be presumed that the plaintiff was ready and willing. And hence the learned Counsel has placed reliance on several decisions of the Supreme Court as well as this court to contend that the court below was not justified in negating the suit relief in the face of the established circumstances. And the absence of bona fides on the part of the defendant who had gone to the extent of denying the execution of the agreement, which in any event, has been held in favour of the plaintiff by the court below. Hence, there is a miscarriage of justice in applying the settled principles of law, as laid down by the Supreme Court . The learned counsel has placed reliance on the following decisions in support of his contentions. i) Vishnu vs. Abdulgani, 2013(1) KCCR 105 , ii) K.Prakash vs. B.R.Sampath Kumar, 2015 SAR (Civil) 82, iii) Silvey and others vs. Arun Varghese and another, (2008)11 SCC 45 , iv) Pratap Lakshman Muchandi vs. Shamlal Uddavadas Wadhwa, (2008)12 SCC 67 , v) Laxman Tatyaba Kankate vs. Taramati Harishchandra Dhatrak, (2010)7 SCC 717 , vi) Motilal Jain vs. Ramdasi Devi, (2000)6 SCC 420 , 4. While on the other hand, the learned counsel for the respondent – defendant would submit that it is imperative in a suit for specific performance, to not only plead readiness and willingness to perform the plaintiff’s part of the contract, but also to demonstrate that there was indeed readiness and willingness to perform his part of the contract. He would submit that there is no such categorical assertions in the pleadings as to the readiness and willingness of the plaintiff. This is the first ingredient, on which the suit would have to be filed. Secondly, it is also pointed out that notwithstanding that a substantial portion of the sale price was said to have been paid, it was necessary for the plaintiff to have instituted proceedings immediately after the alleged breach was committed. Admittedly, the suit was filed almost three years after the date of the breach which in itself disentitle the plaintiff to claim readiness and willingness. Admittedly, the suit was filed almost three years after the date of the breach which in itself disentitle the plaintiff to claim readiness and willingness. Notwithstanding the payment of the price, when the plaintiff claimed to have been put in possession, the question of explaining the inordinate delay in instituting the proceedings with reference to the alleged request on the part of the defendant to grant time to vacate the premises and thereafter to execute the sale deed repeatedly once in six months before the filing of the suit, is a circumstance which is self serving and has not been established on the face of it. Therefore, the finding of the court below that the plaintiff was not ready and willing is not merely with reference to the absence of any such circumstance, but on an admitted circumstance, where there has been considerable delay in even initiating the proceedings after the alleged breach. And since however, the defendant has not challenged the finding of the court below as to the existence of the agreement and payment of the advance, the defendant is bound to repay the amount, which he undertakes to repay on such terms, as this court may impose. It is in this vein that the learned counsel for the defendant would seek to sustain the judgment of the court below. 5. While by way of reply, the learned counsel appearing for the plaintiff would point out that the contention of the defendant that there was no pleading as to the readiness and willingness on the part of the plaintiff is incorrect and would draw attention to para 5 of the plaint, to state that there is indeed such a pleading. And the further contention that the delay in instituting the proceedings was fatal to the suit is not correct since the time was never of the essence of the contract, as already stated in relation to the sale of immovable properties. The plaintiff is also inclined to pay additional amounts if the amount outstanding in a sum of Rs.50,000/is to be paid with interest. The plaintiff would willingly pay additional amount up to Rs.5.00 lakh or such other sum, as this court may impose, as compensation for not having postponed the payment of the balance amount. The plaintiff is also inclined to pay additional amounts if the amount outstanding in a sum of Rs.50,000/is to be paid with interest. The plaintiff would willingly pay additional amount up to Rs.5.00 lakh or such other sum, as this court may impose, as compensation for not having postponed the payment of the balance amount. The learned Counsel would insist that the law would be made to stand on its head if the sanctity of the agreement is upheld, when the court below has held that the agreement was indeed executed and advance amount paid, it would result in gross miscarriage of justice and therefore, a catena of decisions, which are relied upon would support the case of the plaintiff for a decree as prayed for. In the light of the above contentions and having regard to the settled principles of law, it is indeed true that when a substantial sum of the sale price is paid under an agreement of sale and the remaining amount is relatively small, it should be taken that there is readiness and willingness on the part of the plaintiff. In addition, the plaintiff has indeed pleaded that there was readiness and willingness. However, the Supreme Court in Saradamani Kandappan vs. S.Rajalakshmi, AIR 2011 SC 3234 , has sounded the following note, in observing as to the question whether the time is not of the essence of contract in contracts relating to immovable properties, thus: “27. A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S.Vidyanadam and others v. Vairavan (1997) 3 SCC 1 : ( AIR 1997 SC 1751 : 1997 AIR SCW 956) (by Jeevan Reddy J. who incidentally was a member of the Constitution Bench in Chand Rani, ( AIR 1993 SC 1742 : 1993 AIR SCW 1371). This Court observed: “It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. In the case of urban properties in India, it is wellknown that their prices have been goivng up sharply over the last few decades particularly after 1973……. In the case of urban properties in India, it is wellknown that their prices have been goivng up sharply over the last few decades particularly after 1973……. We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties – fuelled by large scale migration of people from rural areas to urban centres and by inflation. Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties – evolved in times when prices andvalues were stable and inflation was unknown – requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so.” (Emphasis supplied) Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to larger Bench as we have held on fats in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and other cases. Be that as it may. 28. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S.Vidyandam ( AIR 1997 SC 1751 : 1997 AIR SCW 956) (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. (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 reach/refusal. (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 reach/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 aprt 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. Hence, in the light of what is stated at Para (iii) in Para 28, it is clear that in the present case on hand, the plaintiff ought to have instituted the suit immediately after the breach of contract. Even the notice calling upon the defendant to perform his part of the contract was issued one month after the alleged breach of contract and the suit is actually filed almost three years after the breach of contract. This would clearly indicate that there has been inordinate delay on the part of the plaintiff in seeking specific performance of contract. Hence, the fact that she has paid a substantial price under the agreement of sale would not absolve the plaintiff of not having moved with expedition. This observation of the Supreme Court, as above, would clearly apply to the facts of the case on hand. Therefore, the vehement and the fervent pleadings on the part of the plaintiff that the defendant may not be held to his bargain and the plaintiff having enjoyed the property as well as the advance amount paid, would be unfair to the plaintiff if at this point of time, he is to be satisfied with the refund of the money, cannot be accepted. Therefore, readiness and willingness as contemplated under the Specific Relief Act is also with reference to the expedition, with which the plaintiff initiated action and in the present case on hand, his explanation that he was made to postpone the initiation of the suit, only on account of the request made by the defendant, is not established by any written documents, or exchange of notices and it is only a self serving claim of the plaintiff, which is sought to be canvassed. That cannot be accepted as establishing a reason for having remained dormant without initiating a suit for specific performance, especially when he claims to have paid the entire sale consideration. It is also to be kept in view that the decrease in the value of the money and the interest that the money would have earned in the hands of the defendant, is not proportionate to the increase in the value of the property. It is one other ground, on which it should be held that the time would necessarily be of essence of the contract and the view taken would require to be revisited, as held by the Supreme Court, is to be kept in view. 6. Consequently, the plaintiff would only partially succeed in establishing that he is entitled to refund with interest thereon. 6. Consequently, the plaintiff would only partially succeed in establishing that he is entitled to refund with interest thereon. Having regard to the fact that since there is no specification of the rate of interest, on which the money is to be refunded in the present case on hand, given the law as to the payment of interest on monies under Section 34 of the Code of Civil Procedure, 1908 (Hereinafter referred to as the ‘CPC’, for brevity)and under Section 3 of the Interest Act, 1978, in that the interest rates under the Interest Act or the CPC, would vary with different banks and since section 80 of the Negotiable Instruments Act, 1881 (Hereinafter referred to as the ‘NI Act’, for brevity), does prescribe 18% per annum, as the rate of interest, where interest has not been agreed upon, it would be appropriate if the interest is imposed at 18% per annum, from the date of receipt of the advance amount till the date of payment, on the amount of Rs.4,00,000/paid in advance by the plaintiff to the defendant and shall be paid within one month from the date of receipt of a copy of this judgment, failing which the interest shall stand enhanced to 24% per annum on the amount, as aforesaid, till the date of the payment. The appeal is allowed in part.