I.S.Sikandar (d) By Lrs. Vs K.Subramani .

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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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