IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1535 OF 2011 [Arising out of SLP(C) No.27198 of 2008]

PRAMOD BUILDINGS & DEVELOPERS (P) LTD. ....APPELLANT  

Vs.

SHANTA CHOPRA ...RESPONDENT

O R D E R

Leave granted.  Heard.

2. The respondent entered into an agreement of sale dated  

26.10.1988 agreeing to sell her property to the appellant for  

consideration of Rs.43,50,000/- and received Rs.9,50,000/- as  

advance. The agreement required the sale to be completed by  

the  intending  purchaser  by  paying  the  full  balance  

consideration of Rs.34 lakhs within 30 days from the date of  

issue of a letter/telegram by the intending vendor informing  

the  intending  vendee  that  necessary  NOC  under  Section  269  

(UL) of the Income Tax Act, 1961 and Income Tax Clearance  

Certificate had been received. The agreement further provided  

that the time was the essence of the contract and it will not  

be extendable and if the intending vendee fails to pay the  

balance of Rs.34 lakhs, the entire earnest money of Rs.9.5

lakhs shall stand forfeited. Clause 5 related to property tax  

and is extracted below:-

“5. That any liability whatsoever regarding the plot  including the property tax payable in respect of the  aforesaid plot shall be paid and be payable by the  intending vendor till the sale deed is executed and  vacant  possession  is  delivered  to  the  intending  vendee.”

3. The respondent cancelled the said agreement by notice  

dated 27.2.1989. However, subsequently the parties entered  

into  a  fresh  agreement  dated  2.5.1989  under  which  the  

cancellation  was  treated  as  withdrawn  and  the  respondent  

undertook to execute the sale deed in terms of the agreement  

dated 26.10.1988 without any change in its terms. The said  

agreement recorded that the NOC (in Form 371) from the Income  

Tax  authorities  had  been  received.  The  agreement  dated  

2.5.1989 provided that on obtaining the Income Tax Clearance  

Certificate, the vendor should inform the purchaser within  

one week and within one month thereafter, the sale should be  

completed by execution of the sale deed and the purchaser  

should pay the balance amount in the presence of the Sub  

Registrar.  On  16.5.1989,  the  respondent  informed  the  

appellant  that  the  NOC  in  Form  No.37-I  and  Clearance  

Certificate  in  Form  No.34-A  have  been  obtained  and,  

therefore, the appellant should pay the balance consideration  

of Rs. 34,00,000/- within one month from the date of receipt  

of the said letter and get the sale deed registered. It is

not in dispute that in terms of the supplemental agreement  

dated 2.5.1989, the sale had to be completed by 17.6.1989.  

It  is  not  disputed  that  as  17.6.1989  and  18.6.1989  were  

holidays, the sale had to be completed by 19.6.1989. As the  

sale  was  not  completed,  the  respondent  alleged  that  the  

appellant  was  in  breach  and  terminated  the  agreement,  by  

notice dated 22.6.1989. This led to the filing of a suit for  

specific performance (Suit No.1660/1989) by the appellant in  

the High Court of Delhi. The main reliefs sought in the said  

plaint are relevant and extracted below:

“(a) for specific performance of the agreement to  sell  dated  26.10.1988  directing  the  defendant  to  execute the sale deed in respect of the plot bearing  No.E-47, measuring 300 sq. yards, situate in Greater  Kailash,  Part-I,  New  Delhi  and  deliver  vacant  and  peaceful possession of the said plot to the plaintiff.

(b) directing the defendant to pay and discharge  all the arrears of property tax due and payable in  respect of the said plot till the date of execution of  the sale deed and any other liability or encumbrance,  if any, in respect of the aforesaid plot prior to the  execution of the sale deed and or to get settled the  alleged dispute with Municipal Corporation of Delhi, if  any,  and  pay  all  the  property  tax  dues  before  the  execution of the sale deed.

(c) for recovery of Rs. 1,02,600/- as interest for  the period from 10.1.1989 till 03.07.1989 on the amount  of Rs.9.5 lacs and Rs.45,333/- on Rs. 34 lacs from 13th  

June to 2nd July, 1989 together with interest pendente  lite and future @ 24% per annum till the sale deed is  executed and Rs. 13.5 lacs as damages being loss of  profits,  general  and  special,  thus  total  amount  of  Rs.15 lacs.”

There was also alternative prayer for return of the earnest  

money amount with interest.

4. The respondent contested the suit. She admitted the  

agreement and the terms thereof. She, however, contended that  

the appellant committed breach by not tendering the entire  

balance sale consideration of Rs.34,00,000/- and getting the  

sale completed by 19.6.1989. Required issues were framed and  

the parties went to trial and let in oral and documentary  

evidence.  Issues  (3)  and  (4),  which  are  crucial,  are  

extracted below:   

“(3) Whether the plaintiff has been still ready and willing  to perform its part of the contract, as alleged?  

(4) Whether the plaintiff is entitled to damages if so it  to what extent?”

After  considering  the  pleadings,  the  evidence  and  the  

arguments,  a  learned  single  Judge  of  the  High  Court,  by  

judgment dated 8.1.2008, dismissed the suit. He held that the  

plaintiff-appellant was not ready and willing to perform the  

contract in terms of the agreement and had failed to tender  

Rs.34,00,000/-  within  the  stipulated  date.  However  with  

reference  to  the  alternative  prayer,  the  court  granted  a  

decree for refund of Rs.9,50,000/- with interest at 10% per  

annum from the date of payment till the date of repayment was  

granted.  Feeling aggrieved,  the appellant  filed an  intra-

court appeal and a Division Bench of the High Court, by the  

impugned judgment dated 2.7.2008 affirmed the decision of the  

learned Single Judge and dismissed the appeal with costs of

Rs.10,000/-.  The said judgment is challenged in this appeal  

by special leave.

5. The  suit  has  been  dismissed  on  the  basis  of  

concurrent findings of fact that the appellant was in breach  

and  not  the  respondent.  We  may  refer  to  the  controversy  

between the parties.  

5.1) The appellant’s case is as under: It is a builder. It  

agreed  to  purchase  the  property  for  construction  of  a  

residential  apartment  building.  The  respondent  failed  to  

furnish the mutation certificate showing that the property  

was registered in her name in the records of the Municipal  

Corporation and failed to produce the up to date tax paid  

receipts. Appellant therefore demanded that the respondent  

should give an affidavit and bank guarantee confirming that  

all municipal taxes had been paid and there were no arrears  

of municipal taxes. Subsequently, it did not even insist upon  

the affidavit and required the respondent to give a letter of  

undertaking and indemnity bond to that effect. Respondent did  

not comply with the said reasonable demand and refused to  

clear the tax dues. The respondent was duty bound to make out  

a good and satisfactory title and that meant that she had to  

satisfy the appellant that all municipal taxes had been paid  

in regard to the property. The respondent failed to discharge

this basic obligation and thereby committed breach.  

5.2) The case of the respondent is as under: There was an  

arbitrary assessment of tax by the Municipal authorities in  

regard to the property and therefore, she had filed a suit  

(Suit No.712/1976 on the file of the Sub Judge, First Class,  

Delhi). The Court had decreed the said suit and directed the  

Municipal authorities to make a fresh assessment in the light  

of its observations. There was no fresh assessment or demand  

by the Municipal Corporation for payment of tax. Therefore,  

she could not pay the municipal taxes and produce receipts.  

She had informed the appellant about the said dispute and had  

confirmed that in terms of the agreement, if and when the  

municipal authorities made the final assessment and made a  

demand in terms of such assessment, she would bear and pay  

the said taxes up to the date of sale. In this background,  

the question of her giving any affidavit or other document  

confirming that all taxes up to date were paid did not arise,  

as the sale agreement itself contained appropriate provision  

in that behalf. When matters stood thus, though the appellant  

had  secured  a  demand  draft  towards  the  balance  price  of  

Rs.34,00,000/-  and  she  was  ready  to  attend  the  Sub-

Registrar’s Office and execute the sale deed by receiving the  

said sum, the appellant insisted that she should either pay  

Rs.5,00,000/-  to  it  towards  municipal  taxes  or  clear  all

municipal taxes due before the sale, as he apprehended that  

his construction project was likely to be affected. As she  

was not agreeable to meet the said illegal demand and pay  

Rs.5,00,000/-, the appellant was not ready to proceed with  

the sale. As the appellant refused to pay the entire balance  

consideration of Rs.34,00,000/- in terms of the agreement and  

get  the  sale  completed,  she  had  no  alternative  but  to  

terminate the contract on 22.6.1989.    

6. The  following  averments  in  the  appellant’s  notice  

dated 24.6.1989 (Ex.P31) proves the version put forth by the  

respondent :  

“You  further  stated  that  you  would  neither  make  any  payment of the property tax and nor you would get your  dispute with the Municipal Corporation of Delhi settled  regarding  the  assessment,  and  finalization  of  the  liability towards the property tax as you were not in any  hurry. The company was then constrained to say that if  your dispute remained pending for ten years and you did  not make the payment and get your dispute settled, the  Corporation would not effect mutation and nor it would  sanction the building plans so long as the dispute was  pending  and  or  that  the  entire  arrears  of  taxes  as  demanded by it (the Corporation) up to date, were paid,  which would remit into huge losses to the company and the  company in that event would be compelled to pay the entire  arrears  demanded  by  the  Corporation  and  only  thereupon  would  be  able  to  get  the  mutation  effected  and  the  building plans sanctioned to compete its project, which  would cause loss to the company and the company would be  unnecessarily burdened with the liability which was yours.  

The appellant also admitted in the said notice (Ex.P31) that  

the  respondent had  attended the  Sub-Registrar’s Office  on  

14.6.1989 and 19.6.1989 and had her presence recorded. The  

averments in the said notice also confirmed the version of

respondent  as  what  transpired  on  19.6.1989,  that  is  the  

respondent  was  not  willing  to  pay  any  amount  until  the  

pending dispute with Municipal Corporation was decided and  

the appellant was not willing to buy unless the respondent  

paid the up to date taxes or gave a bank guarantee/security  

for the likely tax dues.

7. After considering the pleadings and the evidence in  

detail,  the  learned  Single  Judge  recorded  the  following  

findings on Issues (3) and (4):

“The admitted correspondence between the parties showed  that the defendant had in clear cut words stated that she  would be liable for paying the property tax in respect of  property as and when determined in future for the period  when the property remained under her ownership. If this  entire  correspondence  between  the  parties  and  the  covenants to this effect in proposed sale deed were not  sufficient  to  ensure  the  plaintiff,  no  affidavit  or  writing by the defendant would have secured the interest  of the plaintiff but, it seems that plaintiff was adamant  in getting a writing from the defendant to the extent  mentioned above. I consider that there was no fault of  the  defendant.  The  defendant  all  along  was  ready  and  willing to execute the sale deed and it was plaintiff who  because of his adamant behaviour of obtaining an extra  writing  from  the  defendant,  did  not  execute  the  sale  deed. This fact is further proved from the fact that  Defendant admittedly signed the copies of the sale deed  handed over to her. The original sale deed obviously was  to be signed before the Sub-Registrar only and she could  have  signed  the  original  only  if  plaintiff  had  accompanied her to Sub-Registrar. It is not proved from  the evidence of the plaintiff that she had refused to go  to Sub-Registrar’s office. Rather the evidence abundantly  shows that she had gone to Sub-Registrar’s office and was  prepared to appear before the Sub-Registrar and it was  plaintiff who insisted upon additional security from the  defendant  qua  property  tax.  The  plaintiff  could  have  recovered the amount which the plaintiff was made to pay  qua the property for period before execution of the sale  deed.  The  sale  agreement  and  proposed  sale  deed  were  sufficient  security  for  the  plaintiff.  The  distrust  between plaintiff and defendant was result of bitterness

which crept in between them due to exchange of letters  and notices before the execution of the sale deed. In  view of above premise, I therefore, decide both these  issues in favour defendant and against the plaintiff. The  plaintiff  is  not  entitled  to  a  decree  of  specific  performance of agreement to sell.”

This finding of fact that the appellant was in breach has  

been  affirmed  in  appeal,  by  the  Division  Bench.  As  the  

judgments of the courts below were based upon the said pure  

finding of fact based on appreciation of evidence, it does  

not call for interference in exercise of power under Article  

136 of the Constitution of India.

8. The only legal issue that was urged by the appellant  

was that the defendant did not step in to the witness box and  

evidence  was  given  only  by  her  husband  and  that  was  

insufficient.  The  said  contention  was  considered  and  

negatived both by the single Judge and the Division Bench.  

Reliance was placed on the judgment of this Court in Man Kaur  

(Dead) By Lrs. Vs. Hartar Singh Sangha (2010) 10 SCC 512. The  

said decision has no bearing on the facts of this case. As  

rightly held by the High Court, it was for the plaintiff who  

approached the Court to prove that he was ready and willing  

to perform the contract. The plaintiff in a suit for specific  

performance, cannot obviously succeed unless he proved that  

he  was  ready  and  willing  to  perform  the  contract.  The  

exhaustive  correspondence  between  the  parties  clearly  

discloses  the  respective  stands  of  the  parties.  Even  the

prayer in the plaint shows that the appellant was not ready  

to pay the entire balance of Rs.34,00,000/- as agreed under  

the agreement of sale but that the plaintiff insisted upon  

the appellant to pay the municipal taxes before the sale, as  

a condition for sale. If appellant was not willing to pay  

Rs.34 lakhs at the time of sale, as specifically agreed under  

the agreement of sale, the appellant could not claim that it  

was ready and willing to perform its obligations. As noticed  

above, after appreciating the entire evidence, learned Single  

Judge and Division Bench of the High Court have recorded a  

finding that the appellant was not ready and willing and  

consequently dismissed the suit.

9. We find no reason to interfere with the decision of  

the High Court. The appeal is, therefore, dismissed.

  ......................J.               (  R.V.  

RAVEENDRAN )

  ......................J ( A.K. PATNAIK )

New Delhi; February 09, 2011.