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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 3570  OF  2015 (Arising out of S.L.P.(C) No. 1169 of 2008)

PADMAKUMARI & ORS.                 ... APPELLANT(S)

 VERSUS

DASAYYAN & ORS.                           ...RESPONDENT(S)

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted.

2. The concurrent finding of fact recorded by the High

Court of Madras, Bench at Madurai, in Appeal Suit No. 646 of

1994 affirming the judgment and decree dated 15.06.1994 passed

in O.S. No. 63 of 1993 on the file of Sub Court, Kuzhithurai

District is under challenge in this appeal by defendant Nos.

12 to 15 urging various legal grounds.

3. For the sake of convenience, the ranks of the parties

assigned  in  the  plaint  filed  before  the  trial  court  is

adverted to in this judgment.

4. Defendant Nos. 1 to 11 entered into an agreement of

sale on 19.04.1992 in favour of the plaintiff and executed an

unregistered  agreement  agreeing  to  sell  the  suit  schedule

property measuring 2.08 acres of land belonging to them. The

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total  sale  consideration  amount  is  Rs.  65,000/-.  Advance

amount of Rs. 2,000/- was agreed to be  paid for execution of

sale and the remaining balance consideration is agreed to be

paid within nine months from the date of agreement of sale.

Undisputedly, the remaining balance sale consideration is not

paid on or before 18.04.1993. On 3.02.1993, defendant Nos. 12

to  15  entered  into  an  unregistered  agreement  (marked  as

Exhibit B-1) with defendant Nos. 1 to 11 to purchase  the suit

schedule property. As per the said unregistered agreement, the

property is agreed to be sold for Rs. 80,000/-. Advance amount

of Rs. 10,000/- was also paid to defendant Nos. 1 to 11. On

19.04.1993, the suit schedule property Sale Deed No. 75 of

1993 (marked as Exhibit B-3) was executed by defendant Nos. 1

to 11 in favour of defendant Nos. 12 to 15. Out of the sale

consideration of Rs. 80,000/- a sum of Rs. 10,000/- is paid as

advance amount, a further sum of Rs. 30,000/- is paid at the

time of execution of the sale deed, remaining Rs. 40,000/- is

retained to be paid in favour of defendant Nos. 1 to 11, free

of interest, within one month from the date of disposal of

I.A. No. 208 of 1990 in A.S. No. 95 of 1990 pending on the

file  of  District  Court  Nagarcoil.  The  appeal  was  filed

challenging the decree for partition in O.S. No. 11 of 1978.

5. The plaintiff got issued the legal notice (Exhibit A-3)

on 29.04.1993 to defendant Nos. 1 to 15 demanding execution of

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the sale deed as per the agreement (Exhibit A-1). Defendant

Nos. 12 to 15 replied vide Exhibit B-7. The other defendants

did not reply to the demand made by the plaintiff, therefore,

he was constrained to institute original suit on 14.06.1993

before the Sub Court Kuzhithurai. The written statements were

filed by all the defendants denying the claim of the plaintiff

inter alia contending that the time is the essence of the

contract as per unregistered agreement of sale (Exhibit A-1).

As  the  plaintiff  had  agreed  to  pay  remaining  sale

consideration of Rs. 63,000/- within nine months from the date

of  agreement,  the  same  has  not  been  paid.  Since  there  is

breach  of  contract  on  the  part  of  the  plaintiff  and,

therefore,  he  is  not  entitled  for  decree  of  specific

performance in respect of the suit schedule property. Further,

it is pleaded that the plaintiff has not shown his  readyness

and  willingness  to  perform  his  part  of  the  contract,  as

required  under  Section  16(c)  of  the  Specific  Relief  Act,

therefore, defendant Nos. 1 to 11 contended that the plaintiff

is not entitled for a decree of specific performance of the

suit schedule property. Defendant Nos. 12 to 15 denied the

plaint averments, however, specifically pleaded that they are

the bona fide purchasers of the part of the suit schedule

property and they are protected under Section 19(b) of the

Specific Relief Act. On the basis of the said pleadings the

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case went for trial. Before the trial court the plaintiff and

defendants were examined in support of their respective claim

and  counter  claim.  The  trial  court  on  the  basis  of  the

pleadings and evidence adduced on record has formulated the

following four issues:  

(i)   Whether  specific  performance  of  the contract  as  sought  by  plaintiff  is allowable?

(ii) Is sale deed dated 19.04.1993 valid?

(iii) Have  D12  to  D15  purchased  the  suit property in good faith?

(iv) What  are  the  reliefs  plaintiff  is entitled?

6. The  trial  court  on  the  basis  of  pleadings  and  the

evidence produced on record has appreciated and answered the

Issue Nos. 1 and 2 in favour of the plaintiff. Issue No. 3 was

answered against  defendant Nos. 12 to 15 and, accordingly,

answered  Issue  No.  4  and  passed  the  decree  of  specific

performance in favour of the plaintiff in respect of the suit

schedule property with certain directions to him.

7. Aggrieved  of  the  said  judgment  and  decree  of  the

learned  trial  judge,  defendant  Nos.  12  to  15  preferred  an

appeal before the High Court raising certain grounds inter

alia  urging  that  findings  and  reasons  recorded  on  the

contentious issue Nos. 1 to 3 are erroneous in law and are

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liable to be set aside and prayed to set aside the judgment

and decree of the trial court and disposal of the appeal suit

instituted  by  them.  On  the  basis  of  the  rival  legal

contentions, the High Court has formulated certain points and

the same have been answered in favour of the plaintiff by

assigning reasons, rejecting the legal contentions urged in

the  Appeal Suit  on behalf  of defendant  Nos. 1  to 15.  The

concurrent finding recorded in the impugned judgment of the

High Court is under challenge in this appeal urging certain

grounds  and  prayed  to  set  aside  the  impugned  judgment  and

decree.

8. Mr. Thomas P. Joseph, learned counsel for defendant

Nos. 12 to 15 (appellants herein) questioned the correctness

of the concurrent finding of fact recorded on the contentious

issues  raised  by  the  defendants,  which  the  High  Court  has

answered in favour of the plaintiff, contending that as per

the unregistered agreement there is a clause stipulating the

time of nine months for payment of balance consideration of

Rs. 63,000/- to defendant Nos. 1 to 11 out of the total sale

consideration of Rs. 65,000/-, which has not been complied

with by the plaintiff. Under Section 55 of the Indian Contract

Act, 1872 once the time is specified in the agreement, time is

the essence of the contract and the parties shall adhere to

the  same.  Non-adherence  of  the  said  contract  rendered  the

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contract repudiated, therefore, the plaintiff is not entitled

for a decree of specific performance.

9. Learned counsel for defendant Nos. 12 to 15 relied upon

the judgments of this Court in the cases of Gomathinayagam

Pillai & Ors.  vs.  Palaniswami Nadar, AIR (1967) SC 868 para

4, Harold Wood Brick Company Ltd.  vs.  Ferris, (1935) King's

Bench Division 198, Saradamani Kandappan  vs.  S. Rajalakshmi

& Ors., AIR (2011) SC 3234 para 25.

10. Another ground urged by learned counsel for defendant

Nos. 12 to 15 is that the pleadings on behalf of the plaintiff

must be strictly in conformity with Order 6 Rule 3 of the Code

of Civil Procedure (“CPC” for short) which provides Form of

pleadings and placed strong reliance upon Clause 3 of Form No.

47 in Appendix 'A' which reads thus:

“The plaintiff has been and still is ready and  willing  specifically  to  perform  the agreement  on  his  part  of  which  the defendant has had notice”.  

He further places reliance upon the plaint averments at para

6,  which  is  quoted  hereinafter,  submitted  that  the  said

averments are not strictly in conformity with Order 6 Rule 3

CPC  of  Form  47  of  the  aforesaid  clause,  therefore,  the

plaintiff has not shown readyness and willingness which is the

condition precedent as required under Section 16(c) of the

Specific Relief Act, that has been ignored by both the Courts

below, therefore, the concurrent finding recorded by the High

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Court in the absence of this important aspect of the case has

not only rendered the finding erroneous in law but the same

are contrary to the judgments of this Court. Learned counsel

placed strong reliance upon the following judgments in the

cases of Jugraj Singh & Anr.  vs.  Labh Singh & Ors., (1995) 2

SCC 31 at para 6, Ram Awadh  vs.  Achhaibar Dubey, (2000) 2

SCC 428, Ouseph Varghese  vs.  Joseph Aley & Ors., (1969) 2

SCC 539, Abdul Khader Rowther  vs.  P.K. Sara Bai & Ors.,

(1989) 4 SCC 313, Pushparani S. Sundaram & Ors.  vs.  Pauline

Manomani  James  (D)  &  Ors.,  (2002)  9  SCC  582,  Manju  Nath

Anandappa Urf Shivappa Hansai vs.  Tammanasa & Ors.,(2003) 10

SCC 390 paras 15, 17 and 18.

11. The last legal contention urged by learned counsel for

defendant Nos. 12 to 15 (appellants herein) is that the courts

below have erred in law in not noticing the right conferred

upon  defendant  Nos.  12  to  15  under  Section  19(b)  of  the

Specific Relief Act as they are bona fide purchasers since

they,  after  proper  verification  and  obtaining  the

clarification  of  the  property  in  question,  have  paid  full

consideration to defendant Nos. 1 to 11 towards the property

in question, therefore, the concurrent finding of the High

Court not noticing this important aspect of the matter while

affirming the judgment and decree passed by the trial court

rendered the finding erroneous in law and, therefore, the same

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are liable to be set aside.

12. Learned counsel appearing on behalf of the plaintiff

(Respondent  No.  1  herein)  sought  to  justify  the  impugned

judgment and decree of the High Court contending that the High

Court in exercise of its appellate jurisdiction examined the

correctness of the finding rendered by the trial court on  the

contentious issues on proper appreciation of the pleadings and

evidence on record and the same has been reaffirmed by the

High Court by assigning valid and cogent reasons, hence, there

is no ground for this Court to interfere with the same in

exercise  of  its  appellate  jurisdiction  as  there  is  either

miscarriage of justice or error in the judgment and decree

and, therefore, he prayed to dismiss the appeal.

13. Learned  counsel  for  the  plaintiff  placing  strong

reliance  upon  paragraphs  of  the  plaint  in  support  of  the

contention that the plaintiff has averred relevant pleadings

with regard to the non compliance of the condition enumerated

in  the  agreement  of  sale  by  defendant  Nos.  1  to  11  in

non-measuring the suit schedule property before calling upon

the plaintiff to pay  the balance sale consideration amounts

to breach on the part of the defendants. This plea has not

been specifically denied by them in their written statement as

required under Order 8 Rule 5 CPC, therefore, he submitted

that both the courts below have rightly examined the case on

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proper evaluation of the pleadings and evidence on record and

rightly granted the decree in favour of the plaintiff and the

same need not be interfered with by this Court in exercise of

this Court's jurisdiction.

14. With  reference  to  the  aforesaid  rival  legal

contentions, we are required to examine the correctness of the

concurrent finding recorded on the question of stipulation of

period to perform the contract by the plaintiff to pay the

balance consideration of Rs. 63,000/- on the basis of which he

was  awarded  the  decree  of  specific  performance.  We  have

carefully   examined  this  aspect  in  the  backdrop  of  the

recitals contained in the unregistered agreement to sell the

suit schedule property to the plaintiff. As could be seen from

the said agreement the plaintiff has agreed for payment of the

balance sale consideration amount within nine months from the

date  of  execution  of  the  agreement  to  sell.  The  relevant

recitals  of  Exhibit  A1  are  extracted  hereunder  for  better

appreciation of the contentions urged in this regard by the

learned counsel on behalf of defendant Nos. 12 to 15:  

“You are willing to purchase this schedule of property for Rs. 65,000/-. As we were fully aware  that  there  was  no  possibility  to purchase this property for a higher price by anybody else, we also were willing to sell for the same amount and hence we received an advance of Rs. 2,000/- from the total price. This  amount of  Rs. 2,000/-  is received  to relieve us a little from our debt trap. You should  pay  the  balance  of  consideration

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Rs. 63,000/- within 9 months.”  (emphasis supplied)

15. The  above  clause  in  the  agreement  to  sell  clearly

indicates that the  plaintiff has agreed to perform his part

of the contract by paying balance consideration amount of Rs.

63,000/-  within  nine  months.  This  clause  falls  within  the

first  part  of  Article  54  of  the  Limitation  Act,  1963.  In

support of this contention learned counsel for defendant Nos.

12 to 15 has placed strong reliance upon the judgments of this

Court.  It  would  be  suffice  to  refer  to  the  case  of

Gomathinayagam Pillai and Ors.  vs.  Palaniswami Nadar, AIR

1967 SC 868. Para 9 of the said judgment reads as under:

“9.  The Trial Judge apparently confused two independent  issues  one  of  default  in performance of the contract by the respondent and the other of readiness and willingness of the respondent to carry out his part of the contract. As observed earlier, if time is not of  the  essence  of  the  contract,  default occurs when a party serves a notice making time of the essence and requires the other party within a reasonable time fixed by the notice  to  carry  out  the  terms  of  the contract,  and  the  party  served  with  the notice fails to comply with the requisition. In this case no such notice was served, and from  the  mere  delay  in  calling  upon appellants 1 & 2 to complete the contract, default on the part of the respondent cannot be inferred. But the Trial Court also came to the  conclusion  that  the  conduct  of  the respondent as evidenced by his statement and his witnesses proved that he was not ready and  willing  to  perform  his  part  of  the contract. This the Court inferred from the

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delay of three months after April 30, 1959 and the evidence given by the respondent to explain that delay and other circumstances.”  

The  other  judgments  relied  upon  by  the  learned  counsel

reiterate  the  same  proposition.  It  would  be  worthwhile  to

extract paragraph No. 22 of the judgment in the case of Chand

Rani (D) by Lrs.  vs.  Kamal Rani (D) by Lrs., (1993) 1 SCC

519, which reads as follows:

“22.  In Hind  Construction Contractors  case (1979) 2 SCC 70) quoting Halsbury's Laws of England, this Court observed at pages 1154-55 as under:

 "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 times is of the essence of the contract. - The expression time is of the essence means that a breach of the  condition  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

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essence where 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.'              (emphasis supplied)

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 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. The  emphasis  portion  of  the  aforesaid statement  of  law  is  based  on  Lamprell  v. Billericay Union [(1849) 3 Exch 283, 308]; Webb  v.  Hughes  [(1870)  LR  10  Eq  281]  and Charles Rickards Ltd. v. Oppenheim.[ [1950] 1 K.B. 616]."

16. The said legal contention urged on behalf of defendant

Nos. 12 to 15 has been strongly rebutted by learned counsel on

behalf  of  the  plaintiff  contending  that  the  question  of

payment of balance consideration amount of Rs. 63,000/- within

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nine months would have arisen after the terms and conditions

of the contract agreed upon by defendant Nos. 1 to 11 if they

had  measured  the  suit  schedule  property.  They  have  not

discharged  their   part  of  the  contract  stipulated  in  the

agreement to sell, therefore, it is urged by him that time was

not the essence of the contract as defendant Nos. 1 to 11

themselves have failed to perform their part of the agreement.

17. The said contention urged on behalf of the plaintiff is

unacceptable to us that the question of taking measurement

would not arise before the plaintiff  perform his part of the

contract regarding the balance consideration within the period

stipulated in the agreement. Undisputedly, that had not been

done  by  the  plaintiff  in  the  instant  case  within  the

stipulated time and the notice was issued by the plaintiff

only after one year, therefore, the plaintiff has not adhered

to  the  time  which  is  stipulated  to  pay  the  balance

consideration amount to defendant Nos. 1 to 11 which is very

important legal aspect which was required to be considered by

the Courts below at the time of determining rights of the

parties and pass the impugned judgment. The Courts below have

ignored this important aspect of the matter while answering

the contentious Issue Nos. 1 and 2 in favour of the plaintiff

and granted decree of specific performance in respect of the

suit schedule property. The said finding of fact is contrary

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to the terms and conditions of the agreement, pleadings and

the evidence on record. Accordingly, we answer the said issues

in favour of defendant Nos. 12 to 15 after setting aside the

concurrent finding of fact recorded by the High Court.

18. The  second  important  legal  contention  raised  by

defendant Nos. 12 to 15 is that the pleadings of the plaintiff

is not in conformity with Order 6 Rule 3 CPC, clause 3 of Form

No. 47 in Appendix 'A', extracted hereinabove. By a careful

reading of paragraph 6 of the plaint makes it very clear that

the averment as provided under clause 3 is not in  stricto

sensu complied with by the plaintiff. The same is evidenced

from the averments made at paragraph 6 of the plaint which

reads thus:

“6.  The plaintiff is ready and willing to perform his part of the contract by paying the  balance  of  sale  consideration  of Rs.  63,000/-  and  take  the  sale  deed  in accordance  with  the  provisions  of  the agreement deed dated 19.04.1992.”

19. Upon a careful reading of the abovesaid paragraph we

have to hold that the plaintiff has not complied with the

legal requirement which is mandatory as provided under Section

16 (c) of the Specific Relief Act. Section 16(c) fell for

consideration  and  has  been  interpreted  by  this  Court  in  a

number of cases, referred to supra, upon which reliance has

rightly been placed and the said decisions are applicable to

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the fact situation in support of defendant Nos. 12 to 15 and,

therefore, we have to hold that the concurrent finding of fact

recorded by the High Court on Issue No. 1 is erroneous in law

and is liable to be set aside.

20. The last contention urged is whether defendant Nos. 12

to  15  (the  appellants  herein)  are  protected  under  Section

19(b) of the Specific Relief Act as they being the bona fide

purchasers. Learned counsel for defendant Nos. 12 to 15 has

rightly invited our attention that the non-compliance of the

contract  regarding  payment  of  balance  consideration  to

defendant Nos. 1 to 11 on the part of the plaintiff within

nine months is an undisputed fact and further the agreement of

sale is not registered, as is evidenced from the encumbrance

certificate obtained by defendant Nos. 12 to 15 before they

entered into an agreement (Exhibit B-1). Both the Courts below

have  erroneously  recorded  an  erroneous  finding  on  the  non

existent fact holding that the agreement of sale in favour of

the plaintiff is a registered document which, in fact, is not

true. The same is evidenced from the encumbrance certificate.

More so, defendant Nos. 12 to 15 before entering into the

agreement  with  defendant  Nos.  1  to  11  have  made  proper

verification from the competent authority to purchase the part

of the suit schedule property and got the agreement of sale

(Exhibit B-1) executed in their favour, from defendant Nos. 1

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to 11 and thereafter, they got the sale deed registered by

paying sale consideration amount. As could be seen from the

agreement of sale and registered sale deed, which is marked as

Exhibit B-3, it is very clear that defendant Nos. 12 to 15

have  paid  the  sale  consideration  amount  of  the  property,

therefore,  the  reliance  placed  upon  Section  19(b)  of  the

Specific Relief Act as they being the bona fide purchasers,

the  specific  performance  of   contract  cannot  be  enforced

against the transferees. Defendant Nos. 12 to 15 being the

transferee as they have purchased the suit schedule property

for value and have paid the money in good faith and without

notice of the original contract.

21. In view of the aforesaid facts, the purchase of the

suit  schedule  property  by  defendant  Nos.  12  to  15  for  a

valuable consideration is established by the above defendants

by adducing evidence on their behalf before the trial court.

Both the Courts below have omitted to consider this important

piece of pleadings as also the material evidence on record

thereby  the  concurrent  finding  recorded  on  the  contentious

issues has been rendered erroneous in law and is liable to be

set aside. Accordingly, we answer the said issues in favour of

defendant Nos. 12 to 15.

22. For the reasons stated supra, defendant Nos. 12 to 15

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(appellants herein) must succeed. Accordingly the appeal is

allowed, the impugned judgments and decrees of the High Court

and  the trial  court are  hereby set  aside and  the suit  is

dismissed. There shall be no order as to costs.

...........................J.                      (V. GOPALA GOWDA)

..........................J.                    (C. NAGAPPAN)

NEW DELHI, APRIL 7, 2015