I.S.SIKANDAR (D) BY LRS. Vs K.SUBRAMANI .
Bench: G.S. SINGHVI,V. GOPALA GOWDA
Case number: C.A. No.-007306-007306 / 2013
Diary number: 9159 / 2009
Advocates: G. N. REDDY Vs
V. N. RAGHUPATHY
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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7306 OF 2013 (Arising out of SLP (C) No. 20367 of 2009)
I.S. SIKANDAR (D) BY LRs. ... APPELLANTS
VS.
K. SUBRAMANI & ORS. ... RESPONDENTS
J U D G M E N T
V. Gopala Gowda, J.
Leave granted.
2. This civil appeal is directed against the
judgment and order dated 08.12.2008 passed in
Regular First Appeal No. 97 of 2001 by the High
Court of Karnataka, Bangalore, urging certain
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relevant facts and legal contentions, whereby the
High Court has reversed the judgment and decree
passed in the Original Suit No. 2012 of 1985 dated
25.09.2000 by the X1th Additional City Civil Judge,
Bangalore City, Bangalore and has modified the
decree by allowing the appeal, granting the decree
for specific performance of the Agreement of Sale
in favour of the respondent No.1/plaintiff in
relation to the suit schedule property. Further,
it has granted the decree of permanent injunction
against the defendants restraining them from
interfering with the respondent No.1/plaintiff’s
peaceful possession and enjoyment of the suit
schedule property.
3. Necessary facts and legal contentions urged on
behalf of the parties are stated herein with a
view to find out as to whether the impugned
judgment and decree in granting the relief of
specific performance of the sale of the suit
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schedule property in favour of the plaintiff
requires to be set aside by allowing this appeal.
In this judgment for the sake of brevity, we
would like to refer to the ranking of the parties
as assigned in the plaint presented before the
trial court. Since there is incongruence in the
mentioning of exhibits in the judgments of the
trial court as well as of the High Court, we will
refer to the documents as per the annexures
presented along with this appeal.
The plaintiff (respondent No.1 herein)
instituted O.S. No. 2012/85 before the Additional
Civil Judge for grant of a decree of specific performance in respect of suit schedule property
on the basis of the Agreement of Sale dated
25.12.1983 (Annex.P-1) and also for grant of
permanent injunction restraining the defendants
from interfering with his peaceful possession and
enjoyment of the suit schedule property. The suit
property covered in the Agreement of Sale was a
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vacant site measuring 54 ft. from East to West and
42 ft. from North to South carved out of survey
Nos. 18/2, 19, 20 and 21 of Agrahara Thimmasandra
village, known as C.K. Chinnappa Garden, Bangalore
North Taluk, within the territorial jurisdiction
of the Bruhat Bangalore Mahanagara Palike (for
short “BBMP”). It is the case of the plaintiff
that he entered into an agreement with defendant
Nos. 1-4 for sale of the suit property in his
favour for consideration of Rs.45,000/-. A sum of
Rs.5000/- was paid towards part sale consideration
to the defendant Nos.1-4 and they delivered
original title deeds and put the plaintiff in
physical possession of the suit schedule property.
They had agreed to receive the balance sale
consideration amount of Rs.40,000/- at the time of
registration of the sale deed to be executed in
favour of the plaintiff within five months after
securing necessary permission from the Urban Land
Ceiling Authority under the provisions of Urban
Land (Ceiling and Regulation) Act, 1976 (for short
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‘ULCR Act’) now repealed, and Income Tax Act, 1961
and also to get change of khata of the suit
schedule property in their names from that of the
deceased husband of the first defendant in the
property register maintained by the BBMP at the
cost of the plaintiff. Further, the plaintiff had
an obligation to pay the layout and conversion
charges to the BBMP and bear the vendors cost for
securing the permission from the aforesaid
authorities. Further, it is the case of the
plaintiff that the time for completion of the sale
of the suit property was agreed to be extended by
two months in case of delay in securing the
permission from the above referred authorities
which might in turn cause delay in payment of the
conversion charges.
4. It is the case of the plaintiff that on being
put in possession of the suit property, he erected
cattle shed to tether cattle and paid betterment
charges on 25.04.1984 to the concerned
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authorities. There is an acknowledgement to this
effect and he also secured change of khata on
02.05.1984 and paid the property taxes to the BBMP
for the period 1977 to 1983-84 and thereafter, he
also paid the property tax to the BBMP for the
future years.
5. The case of the plaintiff is that the
defendant Nos.1-4 got issued legal notice dated
06.03.1985 (Annex. P-2) through their counsel
calling upon the plaintiff to comply with his part
of the contract by paying the balance sale
consideration on or before 18.03.1985 failing
which legal action would follow, for which the
plaintiff had issued a reply dated 16.03.1985
(Annex. P-3) calling upon the defendant Nos.1-4 to
execute the conveyance deed and receive the
balance sale consideration on 23.05.1985 by
securing the draft sale deed five days prior
thereto. By another letter dated 04.05.1985
(Annex. P-5) he requested the vendors to go to the
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sub-Registrar’s office on 23.05.1985 and execute
the deed of conveyance in his favour. He further
pleaded in the plaint that the vendors by a
telegram dated 18.05.1985 declined to accede to
his request and stated that the Agreement of Sale
was rescinded by the defendants by a letter dated
28.03.1985, which is a legal notice sent by them
through their advocate to the plaintiff, wherein
he was called upon to return the original
documents of suit property given to him at the
time of execution of the Agreement of Sale and on
his failure to do so on or before 10.04.1985, the
said agreement dated 25.12.1983 would stand
terminated vide the aforesaid notice.
6. After institution of the original suit by the
plaintiff for specific performance and permanent
injunction against the defendant Nos.1-4, the
vendors who were served with the suit summons and
notices, remained absent and unrepresented in the
proceedings, and therefore they were placed ex-
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parte. An interlocutory application was filed by
the appellant to implead himself as 5th defendant
to the original suit proceedings pleading that he
is the proper and necessary party to the original
suit proceedings, claiming that he had purchased
the suit schedule property under a sale deed dated
30.05.1985 from his vendors viz. defendant Nos.1-4
(Annex. P-6). The said application was allowed by
the trial court. He was permitted to be impleaded
as defendant No.5 in the original suit proceedings
and he resisted the suit by filing a written
statement dated 13.12.1989, inter alia, admitting
that defendant Nos. 1-4 were the owners of the
suit schedule property and further he denied the
plea of the plaintiff that he is being in
possession of the suit property. It is further
stated that the deed of conveyance in respect of
the suit schedule property was executed by the
defendant Nos. 1-4 in his favour after obtaining
necessary permission from the competent authority
under the ULCR Act by letter dated 25.05.1985 and
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therefore, he has pleaded that the reliefs sought
for by the plaintiff in the suit filed on
26.06.1985 became infructuous. It is further
pleaded that because of default committed by the
plaintiff, he is disentitled to get the decree for
specific performance of sale of the property on
the basis of the Agreement of Sale.
7. The trial court on the basis of pleadings of
the parties framed six issues:
1) Whether the plaintiff proves that defendant
Nos.1-4 have executed Agreement of Sale dated
25.12.1983 and delivered possession of the
same?
2) Whether the plaintiff proves that he is in
lawful possession of the suit property?
3) Whether the 5th defendant proves that he
purchased the property under sale deed dated
30.05.1985 and is in possession of it?
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4) Whether plaintiff was always ready and
willing to perform his part of the obligation?
5) Whether the 5th defendant proves that
plaintiff is the defaulter and is not ready
and willing to perform his part of the
obligation?
6) Whether the defendant proves that plaintiff
put up construction after the completion of
the sale?
8. The original suit went for trial; plaintiff
was examined as PW-1 and marked 27 documents as
Exhs. P1- to P-27. On behalf of the defendants,
the 5th defendant was examined as DW-1 and another
witness named K.N.Prakash as DW-2 and marked 4
documents as Exhs.D-1 to D-4 to prove his case.
The trial court on appreciation of the pleadings,
documentary and oral evidence on record has
recorded the findings of fact in the affirmative
on the issue Nos. 1, 2 and 5 and answered issue
No.3 partly in affirmative and issue Nos. 4 and 6
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in the negative. The trial court in its judgment
has recorded the finding of fact holding that 5th
defendant is the owner of the suit property
pursuant to sale deed dated 30.05.1985 and he is
entitled to take possession of the same from the
plaintiff in accordance with law and accordingly,
partly decreed the suit in his favour vide
judgment and decree dated 25.09.2000.
9. Aggrieved by the said judgment and decree, the
plaintiff preferred Regular First Appeal before
the High Court of Karnakata which was registered
as RFA No. 97/2001, urging various legal
contentions and prayed to set aside the same in so
far as dismissal of the suit for grant of the
decree for specific performance in respect of suit
schedule property on the basis of sale deed is
concerned.
10. The legal contention urged before the High
Court on behalf of the plaintiff is that the trial
court has erroneously recorded its findings on the
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above contentious issue Nos. 1, 2, 3, 4 & 5
without appreciating the plaint averments and the
evidence on record having regard to the undisputed
fact that the Agreement of Sale dated 25.12.1983
and the covenants of the said agreement provide
limited obligation on the part of the plaintiff to
pay the layout charges and expenses required to be
incurred by him to enable the defendant Nos. 1-4,
to secure the permission from the authorities
under the ULCR Act and Income Tax Act for
execution and registration of the deed of
conveyance in his favour. It is further contended
on behalf of the plaintiff that he paid the
betterment charges and property taxes to the BBMP
within the stipulated time, and in addition to
that he got secured the change of khata in favour
of the defendant Nos.1-4 in respect of the suit
schedule property as agreed upon by him in the
agreement. He further contended that the trial
court has recorded an erroneous finding of fact
holding that the plaintiff did not secure the
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permission from the competent authority under the
ULCR Act and the Income Tax Authority to execute
and register the sale deed as agreed by the
defendant Nos.1-4. Therefore, it is contended that
the defendant Nos. 1-4 committed breach of
Agreement of Sale and therefore the plaintiff is
entitled for the decree for specific performance
of execution of the sale deed on the basis of the
Agreement of Sale. It is further contended that
the plaintiff has been ready and willing at all
material times, and even as on 28.03.1985, to pay
the balance sale consideration amount to defendant
Nos. 1-4 on execution of the deed of conveyance of
the suit property. He further urged in the appeal
that execution of the sale deed dated 30.05.1985
in favour of the 5th defendant for a sale
consideration of an amount of Rs.48,000/- that is,
Rs.3000/- in excess of what was agreed upon with
the plaintiff, would demonstrate that the
defendant Nos.1-4 took undue advantage and
committed the breach of the terms and conditions
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of the contract. Further, it is urged that the
above aspects of the matter has not been properly
appreciated by the trial court while dismissing
the suit for not granting the relief of specific
performance in respect of the suit schedule
property in favour of the plaintiff. It is also
urged in the R.F.A. before the High Court that
defendant Nos. 1-4 were required to secure
permission under the ULCR Act and Income Tax
Department to convey the suit property in favour
of the 5th defendant, which further demonstrates
that without such a permission, the registration
of deed of conveyance in favour of the 5th
defendant was impermissible, thereby the defendant
Nos. 1-4 committed a serious breach of the
obligation in terms of Agreement of Sale dated
25.12.1983. It was further contended that the
plaintiff was carrying cash with him to prove that
he had necessary funds to pass on consideration to
the defendant Nos.1-4 at the time of registration
of the sale deed and the learned counsel has
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placed reliance on the reported decision of this
Court in Sukhbir Singh & Ors. Vs. Brij Pal Singh &
Ors.1 It is further contended with reference to
para 24 of the judgment of the trial court, that
the trial court fell into error in recording the
finding of fact on the contentious issue No.3
holding that the 5th defendant is the owner of the
suit schedule property in pursuant to the sale
deed dated 30.05.1985 although he had knowledge of
the Agreement of Sale dated 25.12.1983 in favour
of the plaintiff and therefore he is not the bona
fide purchaser.
11. The said legal contention was seriously
contested on behalf of the 5th defendant justifying
the finding and reasons recorded by the trial
court on the above contentious issue No.3
contending that the trial court on proper
appreciation of pleadings and evidence on record
has rightly answered in his favour and against the
1 (1977) 2 SCC 200
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plaintiff. He has further contended that the reply
notice dated 16.03.1985 which was issued by the
plaintiff shows the delay and inconvenience caused
by the plaintiff to the vendors of the 5th
defendant. The vendors waited patiently by
extending time for registration of the sale deed
in respect of the suit schedule property and the
plaintiff was called upon by them to get the sale
deed executed in his favour by paying the balance
sale consideration, but he had avoided the same on
one pretext or the other leading to the conclusion
that he was not ready and willing to perform his
part of contract and therefore they rescinded the
contract and executed the sale deed dated
30.05.1985 in favour of the 5th defendant in
respect of the suit schedule property. He has
also sought to justify the findings on issue Nos.
4 and 5 by placing strong reliance upon the
evidence of PW-1, the plaintiff to show that the
findings of fact recorded by the trial court on
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the above contentious issues holding that the
plaintiff was not ready and willing at any point
of time to pay the expenses to the defendant Nos.
1-4. He has further contended that though they
made a demand by legal notice dated 06.03.1985 to
get the sale deed executed on or before
18.03.1985, failure on the part of the plaintiff
to do the same would demonstrate the fact that he
was not ready and willing to perform his part of
the contract by paying the balance sale
consideration amount to the defendant Nos. 1-4 as
agreed upon by him and further placed reliance on
the Agreement of Sale dated 25.12.1983 of the suit
property to show that defendant Nos. 1-4 were in
dire necessity of money, due to the death of the
husband of the first defendant who was the bread
winner, and therefore they had agreed to sell the
suit schedule property to the plaintiff. Further,
it is contended by the learned counsel on behalf
of the 5th defendant that time was the essence of
the contract as per Section 55 of the Contract Act
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as agreed upon by the parties in the agreement
which has not been performed by the plaintiff and
therefore the trial court has rightly declined to
grant the decree of specific performance in favour
of the plaintiff.
12. Therefore, the learned counsel on behalf of
the 5th defendant placed reliance on the reported
decisions of the Division Bench of the Karnataka
High Court and this Court in the cases of
Saraswathi Ammal Vs. V.C. Lingam2; Manjunath
Anandappa Vs. Tammanasa3 and His Holyness Acharya
Swamy Ganesh Dassji Vs. Shri Sita Ram Thapar4, in
justification of the findings and reasons recorded
by the trial court on the contentious issues
framed by it.
13. The first appellate court, on the basis of
factual and rival legal contentions urged on
2 ILR 1993 KAR 427 3 (2003)10 SCC 390 4 (1996)4 SCC 526
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behalf of the parties, has framed the following
points for its determination:
i) On issue No.3, whether the 5th defendant
purchased the property under the sale deed
dated 30.05.1985?
ii) Whether the 5th defendant was entitled to take
possession of the suit schedule property in
accordance with law?
iii)On issue Nos. 4 & 5 – whether the 5th defendant
has proved the plaintiff to be a defaulter,
who is not ready and willing to perform his
part of the obligation?
14. The High Court in exercise of its appellate
jurisdiction has answered in favour of the
plaintiff and passed the impugned judgment and
decree after adverting to Section 16 (c) of the
Specific Relief Act, 1963 and sub-sections (1) and
(2) of Section 20 regarding discretionary power to
be exercised by the court for grant of a decree of
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specific performance in his favour. It is observed
by the High Court that the court is not commonly
bound to grant such relief, if merely it is lawful
to do so, and such discretion cannot be
arbitrarily refused but on sound and reasonable
grounds, guided by judicial principles and capable
of correction by the court of appeal.
He has referred to the judgment in the case
of Parakunnan Veetill Joseph’s son Mathew Vs.
Nedumbara Kuruvila’s son & Ors.5, in support of the
proposition of law that the court must
meticulously consider all the facts and
circumstances of the case for grant of a decree
for specific performance and the court should take
care to see that it is not used as an instrument
of oppression to have an unfair advantage. Further
reliance is placed upon another judgment of this
Court in Nirmala Anand Vs. Advent Corporation Pvt.
Limited & Ors.6, wherein this Court has held that 5 1987 (Suppl) SCC 340 6 (2002) 5 SCC 481
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specific performance is an equitable relief and
the Court has to strike a balance of equities
between the parties keeping in view the relevant
aspects, including the lapses that occurred in the
facts of the case. Further, the High Court has
held that the parties are respectively responsible
and though the plaintiff-purchaser always remained
ready and willing to perform his part of the
contract, the defendant Nos.1-4 have not performed
their part of contract. Therefore, the High Court
has set aside the findings of fact on the
contentious issues recorded by the trial court
against the plaintiff. Further, the learned Judge
of the High Court has held that Section 53-A of
the Transfer of Property Act, 1882 provides
protection to a transferee on certain conditions,
one of which is that transferee has performed or
is willing to perform his part of the contract. It
is further held that once a party to a contract
has repudiated the contract, it is not necessary
for the other party to tender the amount payable
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under the contract in the manner provided in the
contract in order to successfully claim the
specific performance of the contract by placing
reliance upon the judgment of this Court reported
in International Contractors Ltd. Vs. Prasanta
Kumar Sur (Deceased) & Ors7. wherein this Court has
explained the above legal position. In another
decision in A. Maria Angelena Vs. A.G. Balkis Bee8,
this Court has made observations with reference to
the plea that for grant of a decree for specific
performance would result in serious hardship to
the vendor or the subsequent purchaser and that
the plaintiff should be compensated in terms of
money must be taken at the earliest stage.
Further, the High Court with reference to the deed
of conveyance in favour of the 5th defendant
executed by defendant Nos. 1-4 raised the question
as to whether the defendant No.5 was a bona fide
purchaser for consideration without notice of the
7 1961 (3) SCR 579 8 (2002) 9 SCC 597
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earlier Agreement of Sale in favour of the
plaintiff is examined and answered against the 5th
defendant. The defendant Nos. 1-4 have remained
absent and unrepresented in the original suit
proceedings, hence they were placed ex-parte, and
therefore, the plea of the 5th defendant that the
plaintiff must always be ready and willing to
perform his part of the contract under such
circumstances is wholly untenable in law. In view
of the said factual position, the plea that the
plaintiff has not been ready and willing to
perform his part of contract as per the agreement,
is available to the 5th defendant under the
concluded contract between the plaintiff and
defendant Nos. 1-4, as per Agreement of Sale dated
25.12.1983. In this regard, the High Court has
placed reliance upon the judgment of this Court in
MMS Investments, Madurai & Ors. Vs. V. Veerappan &
Ors.9 in support of the proposition of law that the
5th defendant stepped into the shoes of the
9 (2007) 9 SCC 660
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vendors, and that the question of readiness and
willingness cannot be pressed into service at all
in facts of the case. The learned Judge of the
High Court while recording his findings and
reasons on the contentious issues has
re-appreciated the pleadings and evidence on
record with reference to rival legal contentions,
and he has placed reliance upon the catena of
decisions of this Court and the Division Bench of
the Karnataka High Court and has held that not
granting of the decree for specific performance in
favour of the plaintiff is held to be bad in law
and he has set aside the judgment and decree of
the trial court and the same was modified granting
decree for specific performance as per Agreement
of Sale in favour of the plaintiff and modified
the judgment restraining the defendant Nos.1-4 not
to disturb the possession and enjoyment of the
suit schedule property of the plaintiff.
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15. The legality and validity of the impugned
judgment and decree are challenged in this appeal
by the deceased 5th defendant, subsequently, he is
substituted by his legal representatives, by
framing certain questions of law and urged various
grounds in support of the same. The questions of
law and grounds urged in this appeal would be
adverted while answering the points that are
framed in this judgment.
16. After perusal of the impugned judgment of the
High Court and the questions of law framed by the
defendant No.5 in this appeal, the following
points would arise for determination of this
Court:
1) Whether the original suit filed by the
plaintiff seeking a decree for specific
performance against the defendant Nos. 1-4 in
respect of the suit schedule property without
seeking the declaratory relief with respect
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to termination of the Agreement of Sale vide
notice dated 28.3.1985, rescinding the
contract, is maintainable in law?
2) Whether the reversal of the findings of
the trial court on the issue Nos. 3, 4 and 5
by the High Court and answering the same in
favour of the plaintiff in the impugned
judgment and granting the decree for specific
performance in favour of the plaintiff in
respect of the schedule property is legal and
valid?
(3) Whether the grant of decree of specific
performance in favour of the plaintiff despite
Clause 12 of the Agreement of Sale dated
25.12.1983 is legal and valid?
(4) Whether the grant of the decree is in
conformity with sub-sections (1) and (2) of
Section 20 of the Specific Relief Act and
whether the learned Judge of the High Court
has exercised his discretionary power
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reasonably in granting the same in favour of
the plaintiff?
5) What decree or order to be passed?
17. Answer to Point No.1
The first point is answered in favour of the
defendant No. 5 by assigning the following
reasons:
It is an undisputed fact that there is an
Agreement of Sale executed by defendant Nos. 1-4
dated 25.12.1983 in favour of the plaintiff
agreeing to sell the schedule property in his
favour for a sum of Rs. 45,000/- by receiving an
advance sale consideration of Rs.5,000/- and the
plaintiff had further agreed that the remaining
sale consideration will be paid to them at the
time of execution of the sale deed. As per Clause
6 of the Agreement of Sale, the time to get the
sale deed executed was specified as 5 months in
favour of the plaintiff by the defendant Nos.1-4,
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after obtaining necessary permission from the
competent authorities such as the Urban Land
Ceiling Authority and Income Tax Department for
execution and registration of the sale deed at the
cost and expenses of the plaintiff. If there is
any delay in obtaining necessary permission from
the above authorities and the payment of layout
charges, the time for due performance of agreement
shall further be extended for a period of two
months from the date of grant of such permission.
In the instant case, permission from the above
authorities was not obtained from defendant Nos.
1-4. The period of five months stipulated under
clause 6 of the Agreement of Sale for execution
and registration of the sale deed in favour of the
plaintiff had expired. Despite the same, the
defendant Nos. 1-4 got issued legal notice dated
06.03.1985 to the plaintiff pointing out that he
has failed to perform his part of the contract in
terms of the Agreement of Sale by not paying
balance sale consideration to them and getting the
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sale deed executed in his favour and called upon
him to pay the balance sale consideration and get
the sale deed executed on or before 18.3.1985.
The plaintiff had issued reply letter dated
16.3.1985 to the advocates of defendant Nos. 1-4,
in which he had admitted his default in performing
his part of contract and prayed time till
23.05.1985 to get the sale deed executed in his
favour. Another legal notice dated 28.03.1985 was
sent by the first defendant to the plaintiff
extending time to the plaintiff asking him to pay
the sale consideration amount and get the sale
deed executed on or before 10.04.1985, and on
failure to comply with the same, the Agreement of
Sale dated 25.12.1983 would be terminated since
the plaintiff did not avail the time extended to
him by defendant Nos. 1-4. Since the plaintiff did
not perform his part of contract within the
extended period in the legal notice referred to
supra, the Agreement of Sale was terminated as per
notice dated 28.03.1985 and thus, there is
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termination of the Agreement of Sale between the
plaintiff and defendant Nos. 1-4 w.e.f.
10.04.1985. As could be seen from the prayer
sought for in the original suit, the plaintiff has
not sought for declaratory relief to declare the
termination of Agreement of Sale as bad in law.
In the absence of such prayer by the plaintiff the
original suit filed by him before the trial court
for grant of decree for specific performance in
respect of the suit schedule property on the basis
of Agreement of Sale and consequential relief of
decree for permanent injunction is not
maintainable in law. Therefore, we have to hold
that the relief sought for by the plaintiff for
grant of decree for specific performance of
execution of sale deed in respect of the suit
schedule property in his favour on the basis of
non existing Agreement of Sale is wholly
unsustainable in law. Accordingly, the point No. 1
is answered in favour of the defendant No.5.
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18. Answer to Point No. 2
Even if we assume that the Agreement of Sale
dated 25.12.1983 is subsisting, we have to answer
point No. 2 in favour of defendant No.5 for the
following reasons :-
It would be very much relevant for us to
extract Clause 6 of the Agreement of Sale which
reads thus:
“The time fixed for execution and completion of the sale transaction is five months from the date of the agreement of sale. The first parties have agreed to get the necessary permission for registration from the competent authorities such as the Urban Land Ceiling authorities and Income Tax Authority within the said period of five months at the cost and expenses of the Second Party. The Second Party has agreed to pay the necessary layout and conversion charges of the suit property to the concerned authorities. The first party have further agreed with the second party that if in case the necessary permission from the aforesaid authorities is delayed and as a consequence thereof the payment of layout charges is delayed, the time for due performance of the agreement shall stand extended for a further period of 2 months from the date of grant of such permission.”
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This position of law is well settled by this
Court in the Constitution Bench judgment in
Smt.Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani(dead) by LRs.10; wherein this Court has held
that it is well settled principle of law, that in
a case of sale of immovable property, time is not
the essence of the contract. However, If the
parties agreed to a specified time in the
agreement to perform their part of the contract,
then time is the essence of the contract and
parties shall adhere to the same.
To emphasize the fact that time is the essence
of the contract before the High Court, the counsel
for the 5th defendant has placed reliance upon the
judgment of this Court in Chand Rani’s case
(supra), the relevant portions of which are
extracted below:
“19. It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the
10 (1993) 1 SCC 519
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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.” 20. “…… Section 55 of the Contract Act which deals with the consequences of failure to perform an executory contract at or before the stipulated time provides by the first paragraph: ‘When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract.’ It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the
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essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence. In Jamshed Khodaram Irani v. Burjorji Dhunjibhai the Judicial Committee of the Privy Council observed that the principle underlying Section 55 of the Contract Act did not differ from those which obtained under the law of England as regards contracts for sale of land.”
22. In Hind Construction Contractors case quoting Halsbury’s Laws of England, this Court observed at pages 1154-55 as under: (SCC pp. 76-77, paras 7 & 8)
“In the latest 4th edn. of Halsbury’s Laws of England in regard to building and engineering contracts the statement of law is to be found in Vol. 4, para 1179, which runs thus:
‘1179. Where time is of the essence of the contract. — The expression time is of the essence means that a breach of the condition
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as to the time for performance will entitle the innocent party to consider the breach as a repudiation of the contract. Exceptionally, the completion of the work by a specified date may be a condition precedent to the contractor’s right to claim payment. The parties may expressly provide that time is of the essence of the contract and where there is power to determine the contract on a failure to complete by the specified date, the stipulation as to time will be fundamental. Other provisions of the contract may, on the construction of the contract, exclude an inference that the completion of the works by a particular date is fundamental; time is not of the essence where a sum is payable for each week that the work remains incomplete after the date fixed, nor where the parties contemplate a postponement of completion.
Where time has not been made of the essence of the contract or, by reason of waiver, the time fixed has ceased to be applicable, the employer may by notice fix a reasonable time for the completion of the work and dismiss the contractor on a failure to complete by the date so fixed.’
It will be clear from the aforesaid statement of law that even where the parties have expressly provided that time of the essence of the contract such a stipulation will have to be read along with other provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental; for instance, if the contract were to include clauses providing for extension of time in certain contingencies or for payment of fine or
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penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract.”
19. The legal principle laid down by this Court
in the above case squarely applies to the facts of
this case for the following reasons. In the
instant case, undisputedly, the plaintiff did not
get Agreement of Sale executed by paying the
remaining consideration amount to the defendant
Nos. 1-4 within the stipulated period of 7 months
as agreed upon by him under Clause 6 of the
agreement by asking the defendant Nos. 1-4 to get
the necessary permission from ULCA and Income Tax
Department after paying the layout charges to the
concerned authorities for getting the sale deed
executed in his favour. The plaintiff has not
complied with the condition within the original
stipulated period of five months and extended
period of two months and even if the delay occurs
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in getting permission from the authorities, that
period was over by July, 1984. It is an undisputed
fact that the date of the institution of the
original suit was nearly 11 months after expiry of
the limitation period stipulated in the agreement
to get the sale deed executed in favour of the
plaintiff.
20. Both the trial court as well as the appellate
court have not examined this important aspect of
the case though the parties have agreed to perform
their part of contract within seven months from
the date of execution of the agreement as
stipulated in clause 6. We have considered this
aspect of the case on the basis of the period of 7
months stipulated in the Agreement of Sale and the
same is answered in favour of the defendants.
21. Answer to Point No. 3
Point No. 3 is also required to be answered in
favour of the 5th defendant by assigning the
following reasons:
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The learned Senior Counsel Mr. P. Vishwanatha
Shetty appearing for the defendant No.5 has placed
strong reliance on the findings of fact recorded
by the trial court on the contentious issue Nos. 4
and 5 in the negative against the plaintiff, by
recording its reasons at paragraphs 12 and 13 of
the judgment of the trial court. Therefore, he
submits that the said findings of fact are based
on facts and evidence on record. Further, he
placed reliance upon Section 16(c) of the Specific
Relief Act, which provision makes it mandatory on
the part of the plaintiff to prove his readiness
and willingness to get the decree for specific
performance of the suit schedule property in his
favour. The learned Senior Counsel for the 5th
defendant also placed strong reliance upon the
judgment of this Court in the case of
N.P.Thirugnnam (dead) by Lrs. vs Dr. R. Jagan
Mohan Rao & Ors.11 in support of the findings of
the trial court on the above contentious issues
11 (1995) 5 SCC 115
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wherein this Court has held that the court must
take into consideration the conduct of the
plaintiff prior and subsequent to the filing of
the original suit along with other attending
circumstances and further the amount of
consideration which he has to pay to the defendant
Nos. 1-4 must be proved by the plaintiff.
Further, the plaintiff is required to prove the
fact that right from the date of execution of the
Agreement of Sale till the date of passing the
decree he must prove that he is ready and has
always been willing to perform his part of the
contract as per the agreement. Further, he rightly
contended the same by placing reliance upon
another judgment of this Court in the case of
P.R.Deb & Associates Vs. Sunanda Roy12 wherein this Court held that the plaintiff in a suit for
specific performance must be ready and willing to
carry out his part of the agreement at all
material times.
12 (1996) 4 SCC 423
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22. The correctness of the findings of fact
recorded by the trial court on the contentious
issue Nos. 4 & 5 is examined by us keeping in view
the law laid down by this Court in the above
referred case with reference to the undisputed
facts in the case on hand namely, that the letter
dated 16.03.1985 sent by the plaintiff would
clearly go to show that the plaintiff was a
defaulter and another letter dated 04.05.1985 sent
by the plaintiff to the defendant Nos.1-4, would
go to show that the plaintiff was not ready and
willing to perform his part of contract to
purchase the suit schedule property by paying
remaining sale consideration amount to the
defendant Nos.1-4 as per the sale agreement as he
had been seeking time without justification.
Further, the trial court has held that the court
has to see conduct of the party as well as the
attending circumstances of the case regarding
whether readiness and willingness of the plaintiff
can be inferred and further the learned trial
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Judge rightly relied upon the provision of Section
16(c) of the Specific Relief Act and appreciated
evidence of PW-1, the plaintiff and came to the
right conclusion and held that the plaintiff had
not produced any document to show that he had the
balance sale consideration amount of Rs.40,000/-,
to pay to the defendant Nos.1-4 to get the sale
deed executed in his favour. Further, there is
nothing on record to show that the plaintiff could
have made arrangement for payment of the balance
consideration amount to them. But, on the other
hand the trial court has recorded the finding of
fact to the effect that the correspondence between
the parties and other circumstances would
establish the fact that the plaintiff had no money
for payment of balance sale consideration to the
defendant Nos. 1-4 though they demanded the same
from him through their legal notices dated
06.03.1985 and 28.03.1985 which notices were
served upon the plaintiff and despite the same he
did not approach the defendant Nos.1-4 to get the
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sale deed executed in his favour even after
service of notice, and, prior to issuance of the
legal notice to him, he never offered to pay the
balance consideration as agreed upon by him to
them even though defendant Nos. 1-4 have complied
with all the formalities required. The learned
Judge, on the question of readiness and
willingness on the part of the plaintiff to
perform his part of the contract to get the sale
deed executed in his favour stated that
performance of his obligation is mandatory as per
Section 16 (c) of the Specific Relief Act and the
law laid down in this regard by this Court which
are referred to supra upon which the trial court
has rightly relied upon and answered the
contentious issues against him by recording valid
and cogent reasons. In view of the foregoing
reasons, we are of the view that the learned trial
judge has applied his mind consciously and
correctly to the admitted facts and on proper
analysis and appreciation, he has correctly
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recorded the finding of fact holding that the
plaintiff has failed to perform his part of the
contract in paying the remaining sale
consideration and made sincere efforts to get
necessary permission from the Urban Land Ceiling
Authority and the Income Tax Department by paying
the conversion charges of the land to get the sale
deed executed in his favour from the defendant
Nos. 1-4 within the stipulated time of five months
and further extended period of two months as per
clause 6 of the agreement. The same has been
erroneously set aside by the appellate court by
recording its reasons by placing reliance upon the
judgments of this Court in Nirmala Anand’s case
(supra), Jawahar Lal Wadhwa Vs. Haripada
Chakroberty13; and A.Maria Angelena’s case (supra).
23. The learned senior counsel has rightly
submitted that the findings of fact on issue Nos.4
& 5 have been erroneously set aside by the learned
Judge of the High Court by recording his reasons 13 (1989) 1 SCC 76
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which are not supported by pleadings and legal
evidence on record. The findings of the learned
Judge of the High Court are contrary to the
admitted facts and legal evidence on record.
24. We have carefully scrutinised the findings
recorded by the trial court on the issue Nos.1,3,4
and 5 with reference to the pleadings of the case
and legal evidence on record and the same have
been erroneously set aside by the learned Single
Judge in the impugned judgment and therefore, the
same cannot be allowed to sustain in law.
25. The first appellate court has committed
serious error both on facts and in law in
reversing the findings of fact recorded on the
contentious issues by referring to the decisions
of this Court in the impugned judgment on the
aforesaid points which are totally inapplicable to
the fact situation, and has erroneously set aside
the findings of fact recorded by the trial court.
Therefore, we are of the considered view that the
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submissions made by learned Senior Counsel on the
basis of the findings and reasons recorded by the
trial court in its judgment are well founded and
the same must be accepted and accordingly we
answer the point No. 3 against the plaintiff and
in favour of the defendant No.5.
26. Answer to the Point No.4
The point No. 4 is also required to be
answered in favour of the 5th defendant for the
reason that sale consideration of Rs.48,000/- in
respect of the suit schedule property has been
paid to the defendant Nos. 1-4 after the
termination of the earlier agreement with the
plaintiff on 10.04.1985 vide notice dated
28.03.1985. Therefore, the contention urged on
behalf of the plaintiff, that 5th defendant is not
the bona fide purchaser, does not arise at all for
the reason that the earlier agreement executed in
favour of the plaintiff by the defendant Nos.1-4
was not subsisting, is the finding recorded by us
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in answer to the point No.1 and we have held that
there is termination of Agreement of Sale dated
25.12.1983 by letter dated 28.03.1985 sent to him
by them. Therefore, the findings recorded by the
appellate court on this aspect stating that the
defendant No.5 is not a bona fide purchaser cannot
be allowed to sustain. Accordingly, we set aside
the same in the above aspect.
27. Further, the High Court should have considered
the relevant and important aspect of the case
namely that the plaintiff is entitled to
compensation as agreed upon by him under clause 12
of the Agreement of Sale which is in favour of
defendant Nos. 1-4. It provides that the
defendant Nos.1-4 have agreed that in the event of
their failure to comply with the terms of the
agreement they shall pay sum of Rs.10,000/- to the
plaintiff and also such sum which is spent by him
towards conversion charges and building plan
charges. Similarly, the plaintiff had agreed that
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in the event of his failure to comply with the
terms of the agreement the defendant Nos. 1-4 are
entitled to forfeit the advance amount. This
important aspect of the terms of the Agreement of
Sale has not been noticed by the learned Judge of
the High Court while reversing the judgment and
decree of the trial court and granted the decree
for specific performance in favour of the
plaintiff in exercise of his discretionary power
under sub-sections (1) and (2) of Section 20 of
the Specific Relief Act. Further, in view of the
foregoing reasons and statutory provisions of
Sections 16(c), 20 (1) and (2) and 21(2) of the
Specific Relief Act, the plaintiff is not entitled
for a decree of specific performance in respect of
the suit schedule property and also he had lost
the right to seek a decree of specific
performance.
28. The learned High Court Judge has gravely erred
in reversing the findings of fact recorded on the
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issue Nos. 3, 4 and 5 by the trial court in favour
of the defendants. He has also failed to take into
consideration the very important aspect of the
matter, namely, that the Agreement of Sale in
favour of the plaintiff was terminated and he had
not sought declaratory relief to declare that the
termination of agreement in the original suit is
bad in law and therefore the suit for specific
performance is not maintainable. Even assuming
for the sake of argument that agreement was
subsisting, the suit for specific performance is
not maintainable in law in view of the breach of
the terms and conditions of the agreement by the
plaintiff. Keeping in view the purpose for which
the Agreement of Sale was executed and the time
stipulated in the agreement as per clause 6 of the
agreement, the contract should have been complied
with within seven months including the extended
period and that has not been done by the
plaintiff. The findings recorded by the trial
court on issue Nos. 4 and 5 and with regard to the
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readiness and willingness on the part of the
plaintiff, the appellate court should have
exercised its discretionary power under sub-
sections (1) and (2) of Section 20 of the Specific
Relief Act, and for this reason also we hold that
the grant of the decree for specific performance
by the High Court in the impugned judgment is
wholly unsustainable in law. The trial court has
come to the right conclusions on the contentious
issues framed by it and has held that even though
Agreement of Sale is proved, the plaintiff is not
entitled for the decree of specific performance in
respect of the suit schedule property in view of
the findings of fact and reasons recorded in the
contentious issues by it in its judgment and we
are in agreement with the same.
29. Accordingly, we allow this civil appeal and
set aside the impugned judgment and decree of the
High Court of Karnataka, Bangalore passed in
Regular First Appeal No.97 of 2001 dated
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08.12.2008 and restore the judgment and decree
passed by the X1th Additional City Civil Judge,
Bangalore City, Bangalore dated 25.09.2000 in O.S.
No. 2012 of 1985, but, in the facts and
circumstances of the case, no costs are awarded in
these proceedings.
…………………………………………………………J. [G.S. SINGHVI]
…………………………………………………………J. [V. GOPALA GOWDA]
New Delhi, August 29, 2013
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