P.Bhaskara Peddi Raju, vs K.Venkata Narasayamma,Died Per ...
2022 Latest Caselaw 2397 AP

      THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI


                  APPEAL SUIT No.410 of 2005


JUDGMENT:

Unsuccessful plaintiff filed the above appeal, assailing the

judgment and decree dated 29.10.2004 passed in O.S.No.93 of

1993 on the file of learned Senior Civil Judge, Bhimavaram.

2. For the sake of convenience, parties to this appeal are

referred to as they were arrayed in suit.

3. The averments in plaint, in brief, are that the

defendant/owner of the suit schedule property offered to sell the

same; that the bargain was settled for a sum of Rs.4,30,500/-;

that on 21.04.1990, the defendant executed agreement of sale in

favour of the plaintiff and received an amount of Rs.20,500/- as

advance; that the balance sale consideration is to be paid by

15.08.1990 and the defendant shall execute sale deed in favour

of the plaintiff or his nominee; that if for any reason, the plaintiff

fails to pay the balance sale consideration and obtain sale deed

by 15.08.1990, the balance sale consideration payable shall

carry 24% per annum; that if the defendant fails to perform his

part of contract, the defendant shall be liable for legal

consequences; that the property is to be delivered on the date of

execution of sale deed; that the plaintiff made part payment of

Rs.40,000/- on 28.04.1990 out of balance sale consideration of

Rs.4,10,000/- and the defendant endorsed on reverse side of the

agreement and it was attested by the husband of the defendant;

that on 15.06.1990, the plaintiff paid part payment of

Rs.20,000/- and the same was endorsed on the reverse side of

the agreement; that plaintiff is always ready and willing to

perform his part of the contract and has been demanding the

defendant and her son to execute sale deed; that the son of the

defendant requested the plaintiff to exclude Ac.0-10 cents on

Eastern side of the property mentioned in the agreement of sale,

for personal use of the family, but the said proposal was not

accepted by the plaintiff; that in the meantime husband of the

defendant died; that the defendant left to Bhilai and plaintiff

was unable to contact the defendant; that the defendant and her

son postponed execution of sale deed and the delay was

occurred due to the latches on the part of the defendant; that

the defendant has to get certificate from income tax authorities;

that the defendant is guilty of latches; that the defendant got

issued legal notice through her Advocate on 28.01.1993 with

false allegations, for which, reply notice, dated 20.06.1993 was

issued by the plaintiff; that the defendant again sent rejoinder

with all false allegations contending that the plaintiff was not

ready with balance of sale consideration; that the defendant has

no manner of right to cancel the agreement and hence filed the

suit seeking specific performance of agreement or an alternative

relief of refunding the advance consideration with interest at

24% per annum.

4. The defendant filed written statement and contended inter

alia that the suit schedule property is situated at the outskirts

of Bhimavaram in China Amiram village abutting Juvvalapalem

road towards South and the said area is proposed to be included

within the limits of Bhimavaram Municipality; that the value of

the lands in the vicinity have been increasing rapidly; that the

defendant put up the suit schedule property for sale; that the

plaintiff bargained with the defendant for purchasing the

property for sale consideration of Rs.4,30,000/-; that as per

terms of agreement of sale, plaintiff should pay balance sale

consideration by 15.08.1990; that the plaintiff was never ready

to perform his part of contract and has not made ready the

balance sale consideration; that the defendant demanded

plaintiff through her husband and son to pay the balance sale

consideration, but the plaintiff neither made the balance sale

consideration ready nor came forward to obtain sale deed; that

the averment that defendant's son requested the plaintiff to

exclude Ac.00-10 cents is not true and correct; that the

husband of the defendant died on 27.09.1990 and the

defendant is living with her sons at Bhimavaram and she never

went to Bhilai; that the defendant is always ready to obtain

income tax clearance and to fulfill all other obligations; that the

defendant got issued legal notice through Advocate on

28.01.1993 to the plaintiff to obtain sale deed by paying the

balance sale consideration together with interest within one

month from the date of receipt of the notice fixing the time for

one month as essence of the contract; that in the notice

defendant made it clear that the agreement of sale stands

cancelled in case of failure on the part of the plaintiff and she

would forfeit the amount; that the plaintiff received notice on

02.02.1993 and sent reply notice on 20.06.1993 with false

allegations; that defendant immediately sent rejoinder, dated

05.07.1993 to the reply and gave one more chance to the

plaintiff to obtain sale deed by fixing time as essence of the

contract; that even after issuance of rejoinder, plaintiff did not

pay balance sale consideration and failed to obtain sale deed

within the time fixed and thus, the agreement of sale stood

cancelled; that the prices of the sites near the suit schedule

property have gone up four times from the date of the

agreement; that the plaintiff is guilty of latches; that the

allegation of the plaintiff about the request of defendant's son to

exclude Ac.00-10 cents is only a story invented by him to cover

up his latches in performing his part of contract and hence

prayed to dismiss the suit.

5. The trial Court framed the following issues for

consideration:

1. Whether the plaintiff is entitled to the specific performance

of agreement of sale, dated 21.04.1990?

2. Whether time is the essence of the contract as started in

the agreement of sale?

3. Whether the plaintiff is not entitled for alternative relief of

the refund of the advance amount?

4. Whether the suit is barred by time?

5. To what relief?

Additional Issues, dated 26.09.2003

1. Whether the defendant fixed time as essence of the

contract by issuing registered notices, dated 28.01.1993

and 05.07.1993 to the plaintiff?

2. Whether the defendant is not entitled to fix time as the

essence of the contract?

3. Whether the plaintiff was and is always ready and willing

to perform his part of the contract?

6. During the trial, the plaintiff examined himself as PW1

besides examining scribe of agreement of sale as PW3. Exs.A1 to

A8 were marked. On behalf of the defendant, her son was

examined as DW1 and Bank Manager of the Cathelic Syrian

Bank was examined as DW2. Exs.B1 to B4 were marked

through DW1 and Exs.X1 to X3 were marked through DW2.

7. The Trial Court by judgment and decree, dated

29.10.2004 negatived the relief of the specific performance and

granted alternative remedy of refund of the amount of

Rs.1,43,642/- with proportionate interest at 12% per annum on

total amount of Rs.80,500/- from the date of the suit till the

payment, creating charge over the suit schedule property.

Aggrieved by the same, plaintiff filed the present appeal.

8. Heard Sri P. Sri Raghu Ram, learned Senior Counsel

appearing for the appellant/plaintiff and Sri E.V.S.S.Ravi

Kumar, learned counsel appearing for the

respondent/defendant.

9. Learned Senior Counsel for the plaintiff would contend

that the Trial Court having found that time is not essence of

contract, ought to have decreed the suit. He would further

contend that the plaintiff marked documents with regard to his

financial status and his readiness and willingness to perform

his part of the contract, within the stipulated time. He would

also contend that the evidence of PW1 coupled with Exs.X1 to

X3 prove that the plaintiff got sufficient amounts. He would also

contend that due to the failure of the defendant in getting

income tax clearance, the plaintiff would not be non-suited.

Learned Senior Counsel relied upon judgment rendered in

P. Ramasubbamma vs. V. Vijayalakshmi and Ors.1. Basing

on the above judgement the learned Senior Counsel would

submit that once the execution of agreement to sell and the

payment/receipt of advance substantial sale consideration were

admitted by the vendor, thereafter nothing further was required

to be proved by the vendee and suit for specific performance is

to be decreed.

10. Per contra, Sri E.V.V.S.Ravi Kumar learned counsel for

the respondent would contend that the appellant/plaintiff was

never ready and willing to perform his part of contract. He

would contend that agreement of sale was entered into on

21.04.1990 and the time fixed to perform contract is by

15.08.1990. Since the plaintiff did not come forward to perform

his part of contract, defendant issued Ex.A4, notice, dated

28.01.1993 for which the plaintiff issued a belated reply, dated

20.06.1993 under Ex.A5, raising false pleas. He also further

contended that no notice was issued by the plaintiff under form

47 and 48 of appendix A demanding the defendant to perform

her part of contract. He would also contend that the defendant

issued rejoinder, dated 05.07.1993 to the reply notice and

expressed readiness to execute the sale deed, however, the

plaintiff did not make the amount ready. Hence, mere averment

Civil Appeal No.2095 of 2022

of readiness and willingness is not sufficient and eventually

prayed the Court to dismiss the appeal. He placed reliance on 1)

His Holiness Acharya Swami Ganesh Dassji vs. Sita Ram

Thapar2, 2) Umabai and Another v. Nilkanth Dhondiba

Chavan (Dead) By Lrs. and another3, 3) Kalawati (Dead)

Through Legal Representatives and Others v. Rakesh Kumar

and Others4, 4) Bhavyanath represented by Power of

Attorney Holder v. K.V. Balan (Dead) Through Legal

Representatives5.

11. On the basis of the above pleadings and arguments the

following points would arise for consideration:

1. Whether the plaintiff is entitled to specific performance of

contract of sale basing on agreement, dated 21.04.1990?

2. Whether the plaintiff is always ready and willing to

perform his part of contract?

3. Whether time is essence of the contract as per

understanding of the parties in contract of sale, dated

21.04.1990?

1996 (4) SCC 526

2005 (6) SCC 243

2018 (3) SCC 658

2020 (11) SCC 790

4. Whether the defendant fixed time as essence of the

contract by issuing Ex.A4, dated 28.01.1993 and Ex.A6,

dated 05.07.1993?

5. Whether the suit is barred by limitation?

6. To what relief?

POINT NOS.1 to 5:

Since all these points are inter-connected, they are all

dealt with together.

12. As per Ex.A1, the suit schedule property is to an extent of

Ac.0-41 cents or 1653 square meters in R.S.No.100/3 of China

Amiram village of Bhimavaram Mandal, West Godavari District.

Total sale consideration amount is Rs.4,30,500/-. An amount of

Rs.20,500/- was paid as an advance and the plaintiff had to pay

the balance sale consideration of Rs.4,10,000/- by 15.08.1990

and get the sale deed executed either in his favour or his

nominee. The agreement further recites that if the plaintiff drags

on the matter without performing his part of contract, he had to

pay interest at Rs.2/- and to get his document executed. If the

defendant fails to perform her part of the contract, she would be

liable for legal consequences. Pursuant to the agreement of sale,

Rs.40,000/- was paid on 28.04.1990 and Rs.20,000/- was paid

on 15.06.1990 and the endorsements were scribed on the

backside of agreement of sale and they are marked as Exs.A2

and A3.

13. The plaintiff after payment of advance of Rs.40,000/- on

28.04.1990 and Rs.20,500/- on 15.06.1990, did not move his

little finger, which constrained the defendant to issue legal

notice, dated 28.01.1993 under Ex.A4. By issuing Ex.A4, legal

notice, the defendant called upon the plaintiff to pay balance

sale consideration together with interest within one month from

the date of receipt of the notice and to get the sale deed

executed for the suit schedule property and also fixed time as

essence of contract. The defendant also made it clear that if the

plaintiff fails to perform his part of the contract, the defendant

would cancel the agreement and forfeit the amount.

14. The plaintiff issued reply notice, dated 20.06.1993 under

Ex.A5 i.e. after five months of issuance of Ex.A4. The plaintiff

asserted that he made ready the balance sale consideration with

interest as stipulated in the agreement and also the requisite

amount for stamps and registration and informed the same to

the defendant's son and husband and the son of the defendant

requested the plaintiff to exclude Ac.0-10 cents on the Eastern

side of the suit schedule property for personal use of their family

for which the plaintiff did not agree. It was further stated in the

reply notice that the husband of the defendant died and the

defendant went to Bhilai, as such plaintiff could not approach

the defendant. Hence, the delay occurred in execution of regular

sale deed. The plaintiff further asserts that he is ready and

willing to perform his part of contract and stated that because of

the attitude of the defendant, it has been delayed. It was

further stated in the reply notice that he is ready to deposit

balance consideration inclusive of interest in the bank to show

his bonafides and the plaintiff had to get clearance certificate

from the Income Tax Department. It was further stated that

reply could not be issued immediately for the reason that the

defendant's son continued deliberations with the plaintiff

through their common friend with regard to exclusion of Ac.0-10

cents out of the suit schedule property.

15. For the reply notice, defendant got issued rejoinder notice,

dated 05.07.1993 under Ex.A6, wherein it was stated that the

defendant is always ready and willing to execute sale deed as

per terms of agreement of sale and the son of the defendant

never asked the plaintiff to exclude Ac.0-10 cents from the suit

schedule property either through M.S. Subrahmanyam Raju or

through any other person and that she is ready to execute sale

deed for Ac.0-41 cents. It was also stated in the rejoinder that

she never went to Bhilai and plaintiff is responsible for causing

delay and that income tax clearance certificate would be

obtained after execution of sale deed and before its registration.

In rejoinder notice, defendant again fixed one month period

making time as essence of the contract. After issuance of Ex.A6-

rejoinder, plaint was presented on 16.08.1993.

16. In the instant case, no notice was issued by the plaintiff in

terms of forms 47 and 48 appended to appendix A of CPC which

is mandatory. The plaintiff by issuing notice had to plead and

prove that he has always been ready and willing to perform his

part of contract.

17. The mere averment in the plaint that he is ready and

willing to perform his part of contract is not sufficient. The

plaintiff had to plead and prove that he has always been ready

to perform his part of contract since the date of execution of

agreement of sale till execution of the document.

18. In His Holiness Acharya Swami Ganesh Dassji vs. Sita

Ram Thapar, the Hon'ble Apex Court held as under:

"There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For determining his willingness to perform his part of the contract, the conduct has to be properly scrutinised.

There is no documentary proof that the plaintiff had ever funds to pay the balance of consideration. Assuming that he had the funds, he has to prove his willingness to perform his part of the contract. According to the terms of the agreement, the plaintiff was to supply the draft sale

deed to the defendant within 7 days of the execution of the agreement, i.e., by 27.2.1975. The draft sale deed was not returned after being duly approved by the petitioner.

The factum of readiness and willingness to perform plaintiffs part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The facts of this case would amply demonstrate that the petitioner/plaintiff was not ready nor capacity to perform his part of the contract as he had no financial capacity to pay the consideration in cash as contracted and intended to bite for the time which disentitles him as time is the essence of the contract.

19. In Umabai and Another v. Nilkanth Dhondiba Chavan

(Dead) By Lrs. and another, the Hon'ble Supreme Court held

as under:

"In terms of Form Nos. 47 and 48 appended to Appendix A of the Code of Civil Procedure, 'the plaintiff must plead that he has been and still is ready and willing specifically to perform the agreement on his part of which the defendant has had notice' or 'the plaintiff is still ready and willing to pay the purchase-money of the said property to the defendant'.

34. In Bank of India Ltd. V. Jamsetji A.H. Chinoy AIR 1950 PC 90, it was held :

"...It is true that plaintiff 1 stated that he was buying for himself, that he had not sufficient ready money to meet the price and that no definite arrangements had been

made for finding it at the time of repudiation. But in order to prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction. The question is one of fact and in the present case the appellate Court had ample material on which to found the view it reached..."

20. In Bhavyanath represented by Power of Attorney

Holder v. K.V. Balan (Dead) Through Legal Representatives,

the Hon'ble Apex Court held as under:

"We have noticed the law to be that it does not suffice for the Plaintiff in a suit for specific performance to establish that the Defendant was in breach to seek a decree for specific relief. The Plaintiff must further establish, if it is contested that he was ready and willing from the date of the contract to perform his obligations."

21. Thus, the basic principle behind Section 16 (c) of the

Specific Performance Act, read with Explanation (ii) is that any

person seeking benefit of specific performance of contract must

manifest that his conduct has been blemishless throughout

entitling him to the specific relief and the Court is to grant relief

on the basis of the conduct of the person seeking relief and that

the meaning of such averment of readiness and willingness

must be that non-completion of the contract was not the fault

on the part of the plaintiffs and that they were disposed and

able to complete it had it not been renounced by the defendant.

22. Readiness and willingness are quite distinct and different

in the context of Section 16 (c) of the Specific Relief Act.

Readiness connotes financial capacity of one who seeks to

enforce specific performance. Willingness distinctly refers to his

personal or mental inclination to seek performance of the

contract. The two words employed by the Statute are not mere

surplus age for the other or even words with the connotation

that have closely resembling status. The two being distinct, both

must be pleaded and proved independently of the other

throughout, from the time the contract is entered into and till

the suit is filed, and also pending suit till a decree is passed.

Whether the plaintiff proved his readiness and willingness

and his capacity pursuant to the agreement of sale is to be

considered?

23. With regard to the plaintiff's readiness and willingness as

well as capacity to pay the balance sale consideration, plaintiff

deposed that he cannot say whether there is any document with

him with regard to having much cash or balance during that

period. In fact, plaintiff deposed that he got balance

Rs.1,00,000/- to Rs.2,00,000/- in his house. However, he paid

an amount of Rs.20,500/- towards advance and did not produce

any document to show that he was having so much cash by the

date of Ex.A1 or till filing of the suit. Though the plaintiff stated

that he received Rs.6,00,000/- towards sale consideration of his

bungalow at Banjara Hills, Hyderabad, he could not answer the

question as to where the said amount was kept. The plaintiff

also stated in his examination that he was having Rs.4,00,000/-

to Rs.5,00,000/- at the time of Ex.A3, endorsement, however, he

failed to explain the reason why he could not pay the amount

and get the sale deed executed. No averment was made either

in the reply notice or in the plaint with regard to his possessing

of Rs.4,00,000/- to Rs.5,00,000/-. The plaintiff deposed with

regard to availability of cash, which is extracted herein :

"I have no accounts. Unless I see my accounts I cannot say that I am made an entry of Rs.5 lakhs in my account. I am an income tax assessee. The amount of Rs.5 lakhs belong to me and my wife. I do not remember how much amount out of Rs.5 lakhs belong to my wife. My wife is also house hold. She is also an income tax assessee. The income tax assessee should maintain the accounts for the income. I do not know what types of accounts maintained by me but my auditor knows it. My income is assessable income every years."

He further deposed as under:

I do not know if the auditor filed my income tax returns or prepared my accounts. Unless I consult my auditor I cannot say whether he maintained any accounts. I cannot say whether any accounts were available with him. My account year is from 1st April to 31st March. I do not remember whether he filed my income tax returns for the years, 1990-91, 1991-1992

and 1992-1993. I do not remember whether any of my accounts or income tax returns for the years 1991 to 1993 would reflect that I was having cash of Rs.5 lakhs at any time. I do not remember whether I have paid any income tax from 1989-1990 to 1992-93. The department will issue the assessment order if the income tax returns are submitted. I do not remember whether I have paid the advance tax to Income Tax Department for the years from 1989-1990 to 1992-93. ... I cannot say the details of the income tax details of the income tax paid for the said period i.e., from 1989- 1990 to 1992 to 1993. I cannot say the dates of payment of income tax. There is no documentary evidence available with me".

24. The plaintiff marked Ex.A8 savings bank book of his

account in Catholic Syrian Bank, Bhimavaram branch. A

perusal of Ex.A8 shows that account was opened on 14.08.1993

and the plaint was presented on 16.08.1993. Basing on that

plaintiff has been contending that he got the cash balance. An

amount of Rs.6,50,000/- was deposited on 14.08.1993 and next

day the entire cash was withdrawn, and the balance is only

Rs.500/-. The attempt made by the plaintiff to convince the

Court that he is having money to perform his part of the

contract is denied by Ex.A8 itself. A perusal of other entries in

Ex.A8 for all other days up to last entry, dated 21.11.1995

shows the amount maintained in his account and that the cash

balance as on 3rd June was Rs.50,237/- and all other days the

amount varies from Rs.276/- to 11, 857/-. Hence, it is proved

that the plaintiff was not keeping balance amount running into

lakhs in his bank account.

25. In fact defendant examined the Bank Manager of Cathelic

Syrian Bank as DW2. Ex.X1 is true copy of account in the name

of the plaintiff and his wife for the loan taken in 1993. According

to Ex.X1 plaintiff and his wife borrowed Rs.8,00,000/- towards

agricultural land and it was repayable in one year, which was

paid after one year. Ex.X2 shows another loan in the year, 1995

to a tune of Rs.3,00,00/-. Though it was payable within one

year, it was paid after one year. Ex.X3 also shows that the

plaintiff availed Rs.6,00,000/- of loan in 1995 and repaid after

one year. In the cross-examination, it was elicited that as

against immovable property security of Rs.19,00,000/- and odd,

they have given agricultural loan of Rs.8,00,000/- to the

plaintiff and his wife under Ex.X1. In spite of the defendant's

contention that the plaintiff did not possess sufficient income to

perform his part of the contract, the plaintiff did not file any

document to prove his financial status.

26. The plaintiff, though, deposed about his purchasing of

requisite stamps for the purpose of registration, nothing was

produced before the Court and in fact he deposed about

purchase for the first time in his cross-examination. Even in his

reply notice under Ex.A5, he did not state about purchasing of

stamps. All these circumstances show that the plaintiff was

neither ready to perform his part of the contract nor has any

sufficient cash to pay the balance sale consideration. Mere

making an averment in Ex.A5 that the plaintiff is ready will not

inure to the benefit of the plaintiff unless, he shows to the Court

that he is having that amount and he is ready to perform his

part of the contract.

27. The plaintiff put forth a plea that it is the son of the

defendant, who insisted for exclusion of Ac.0-10 cents from the

suit schedule property and plaintiff did not accept the said

proposal. In view of the same, the delay was occurred. The

evidence of PW1 on that aspect is to be considered. PW1 stated

as follows:

"I cannot say the date or month when he told me (refer to the son of DW1 about telling him for exclusion of 10 cents) I did not agree to leave Ac.0-10 cents to the defendant then Chandrasekhara Varma without saying anything left the place, I did not demand the defendant subsequently to execute the sale deed".

"Chandrasekhara Varma told me that they require Ac.0-10 cents and if I leave that extent, the defendant will execute the sale deed and secure the income tax clearance certificate. I cannot say the date or month when he told me but it is in the month of September",

..... "Thereafter I entrusted the matter to my friends to pursue the defendant for execution of sale deed." ....

"I entrusted the matter to my friends to pursue the defendant for execution of sale deed. I entrusted the matter to my friend Subrahmanyam Varma. Subrahmanya Varma was visiting the house of defendant daily to pursue the matter."

28. The evidence extracted is running contrary to his

pleadings. PW1 further stated that he sent PW2 to the

defendant's house with balance sale consideration. The plaintiff

himself pleaded that the defendant was not available at her

house and she went to Bhilai and he does not know where the

defendant is all these days after the death of her husband since

she was staying at Bhilai. It is highly improbable to believe that

the plaintiff sent PW2 to defendant's house with balance sale

consideration. If really the plaintiff sent balance consideration

with Subrahmanyam Raju, in September, 1990 and the

defendant refused to receive the amount, nothing prevented the

plaintiff from issuing notice immediately. The plaintiff kept quiet

from 1990 to 1993 and he issued rely notice only after the

defendant issued legal notice under Ex.A4. In fact, PW2 deposed

that defendant went to Bhilai after the death of her husband

and returned from Bhilai after one year. He further stated that

he did not advise the plaintiff to give notice to the defendant

about refusal of her son to receive balance sale consideration.

Therefore, the evidence of PW2 does not inspire confidence of

the Court.

29. Thus, in view of the discussion made supra, this Court is

of the opinion that plaintiff failed to prove his readiness and

willingness to perform his part of the contract and also his

possessing sufficient amount to purchase the property.

30. The plaintiff further pleaded that since the defendant

could not get income tax clearance, sale deed could not be

executed.

Whether non-obtaining income tax clearance certificate by

defendant would inure to the benefit of plaintiff is to be

considered?

31. In Mohammed Ibrahim and Ors. Vs. Mohammed Abdul

Razzak6 Division Bench of the High Court of Andhra Pradesh at

Hyderabad held as follows:

"20. The important contention that was taken is that the vendor did not obtain Income Tax Clearance Certificate without which no registration could be made, in view of specific bar under Section 230-A(1) of Income Tax Act. On the other hand, the learned Counsel for the vendor contended that there was no stipulation in Ex.B1 that Income Tax Clearance Certificate must be produced even before the vendee informs his willingness and ready with the balance of sale consideration. Had DW.1 was ready with money, he would have obtained such a Clearance Certificate. In fact that question did not arise when DW.1 could not show that he was ready with the amount. No doubt he must produce Clearance Certificate before the

AIR 2007 AP 294

Registration Authority as required under Section 230-A(1) of Income Tax Act. Since DW-1 was never ready to perform his part of contract, he was not obliged to obtain all these certificates beforehand.

21. Before considering the said question, it may be mentioned herein that though there was no stipulation in Ex.B1 agreement, Section 230-A(1) of Income Tax Act stipulates that Income Tax Clearance Certificate is required to be produced by the time of registration. The said section reads as follows:

Notwithstanding anything contained in any other law for the time being in force, where any document required to be registered under the provisions of Clause (a) to Clause

(e) of Sub-section (1) of Section 17 of the Indian Registration Act, 1908 (16 of 1908), purports to transfer, assign, limit, or extinguish the right, title or interest of any person to or in any property (other than agricultural land) valued at more than (five lakh) rupees, no Registering Officer appointed under that Act shall register any such document, unless the (Assessing) Officer certifies that....

22. In Chand Rani v. Kamal Rani : AIR1993SC1742 , the Supreme Court while considering a plea as to the requirement of production of Income Tax Clearance Certificate held:

No doubt, there were obligations on the part of the defendant to clear off the mortgage as well as to obtain the Income Tax Clearance Certificate. Those obligations will arise only after the payment of Rs. 98,000-00. In the absence of such a payment the plaintiff had no right to insist upon these obligations being performed.

23. The learned Counsel for the respondent contended that in order to get over the payment of amount the plaintiff introduced this plea on legal advise. He relied on the passage in the decision Mohd. Abdul Razak v. B. Venkatesh @ Venkataiah : AIR2006AP300, to which one of us is a party. While dealing with a case where each party throwing blame against the other by claiming that the other party was not ready, observed:

As could be seen from the pleadings as well as evidence on both sides, each party is throwing blame against other. Section 9 of the Specific Relief Act, 1963 (for short 'the Act') enables a defendant to raise, in a suit of specific performance, all those defences which he is eligible in a suit on contract. Section 10 enumerates the cases in which specific performance can be granted. Specific performance is a discretionary remedy. Section 16 lays down grounds on which the relief may be refused to the plaintiff on account of his conduct; and Section 20 direct the circumstances in which the discretion may or may not be exercised in granting the relief. It is settled proposition of law that where time is of the essence of the contract, and the plaintiff has failed to perform his part of the contract within the stipulated time, specific performance can be refused. Time, in contracts for sale of immovable property, is not of the essence of the contract, unless the nature of the property and surrounding circumstances make it so. Equity treats limits of time as supporting to the main purpose of the parties. So long as the plaintiff is willing to make payment on or before the date which was prescribed, or within a reasonable time, the ordinary presumption, that the time is not of essence of the contract of sale of immovable property, would not be displaced. It is said that where the time is not of the

essence of the contract for sale of immovable property, some delay in payment of consideration money is no bar to specific performance; provided the delay has caused no prejudice to the defendant or abandonment by the plaintiff or such a change as would make the relief inequitable. If a plaintiff is negligent and dilatory in carrying out his part of the contract for sale of immovable property, the plaintiff cannot get his contract specifically performed.

In identical situation, it was observed:

OBVIOUSLY in order to get over the delay in payment of balance of sale consideration amount, the plaintiff introduced a plea that the defendant agreed to produce the Income Tax Clearance Certificate for execution of the sale deed. The said stipulation was not made a mention either in Ex.A1 or in Ex.A2.... The defendant pleaded categorically that the plaintiff was not having the remaining balance of sale consideration. It was his case that he cancelled the agreement and forfeited the advance amount. The plaintiff could not prove that he was having requisite amount. He did not file account though he was businessman. He did not file bank account to show that he has capacity to pay the balance amount. Naturally, if the specific performance is ordered, it would cause injustice to the defendant.

The very same logic and reasoning applied in the above case would equally apply to the case on hand. The agreement holder was never ready and willing to complete his part of contract. He has no money even to pay rent. There were laches on his part. It did not come to the stage to furnish Income Tax Clearance Certificate. This plea is pressed in service to get over his only latches."

32. The requirement of copy of income tax certificate would

arise after execution of sale deed (draft sale deed), but not before

the document was executed. The draft conveyance duly settled

by the parties is to be shown to the income tax authority.

33. Forms 37 EE and 37I under Chapters XXA and XXC of the

Income Tax are required to be filed upon transfer of immovable

property being made. The word transfer shows that parties have

actually executed a draft conveyance, mortgage, exchange, gift

or lease constituting transfer under the Transfer of Property Act.

It is only upon the ultimate contract between the parties to

transfer the immovable property from one party to another the

Income Tax Authority is required to be informed as per the

forms set out in the Act. This would be to enable the Income Tax

Authority to acquire the immovable property itself, if the

consideration that passes there under is not accepted by the

authority and a certificate to that effect granting its no objection

to transfer the property is not given. Any transfer effected

without informing the Income Tax Authority by filing the

aforesaid forms, would be void.

34. In the reply notice under Ex.A5, plaintiff asserted that

since the value of the schedule property is more than

Rs.2,00,000/-, the defendant had to obtain income tax

clearance certificate from the department and she should show

it to the plaintiff at the earliest enabling him to purchase non-

judicial stamps in that regard. In the reply notice, it is not

indicated with regard to the preparation of rough sale deed.

Curiously, PW3, document writer deposed in his chief

examination that prior to 15.08.1990, he drafted rough sale

deed at the request of plaintiff and defendant's husband and

son to obtain income tax clearance certificate. If really had the

scribe prepared rough sale deed, prior to 15.08.1990, the same

would have been reflected in Ex.A5, notice issued on behalf of

the plaintiff.

35. Thus, these instances make things more than discernable

that the plaintiff did not make the balance consideration ready

to perform his part of the contract and when notice was issued

by the defendant to get ready with the amount, he concocted

story that defendant's son requested him to exclude Ac.0-10

cents from the suit schedule property and also the plea of

defendant not getting income tax clearance certificate from the

department.

36. By issuance of notice and rejoinder under Exs.A4 and A6

respectively, the defendant made time as essence of the

contract, however, in the cross-examination DW1 categorically

stated that time is not made as essence of contract either under

Exs.A1, A4 or A6. Going by the conduct of the defendant in

extending time for making payment from time to time and

further enabling the plaintiff to perform his part of the contract,

it indicates that the defendant did not make time as essence of

the contract. In view of the conduct of the defendant, this Court

holds that time is not essence of the contract in respect of

Ex.A1.

37. The agreement is dated 21.04.1990 and the suit was filed

on 16.08.1993 i.e. three years after execution of agreement of

sale and thereafter the judgment was rendered by the civil Court

in the year, 2004 i.e. fourteen years after execution of agreement

of sale. The equitable relief of specific performance if granted

definitely it creates hardship to the defendant in view of the

escalation of prices and the developments made in the

surrounding areas of the suit schedule property. According to

PW1, the suit schedule property is located in the outskirts of

Bhimavaram town and SRK Engineering college was established

in China Amiram village near the suit schedule property. A

junior college is also located near the suit schedule property and

other structures were also raised. PW2 also corroborated in his

cross-examination about the developments of surrounding areas

since 1990. It was elicited from the cross of DW1 that in the

year, 2002, one Kanumuri Laxmikanthamma sold her site to

one Paboyina Suseela at the rate of Rs.2,80,000/- per cent and

the said site is situated at a distance of 50 yards from the suit

schedule property. It was also elicited that the value of the

property as on that date was Rs.3,00,000/- to 3,50,000/- per

cent, which shows that there is phenomenal increase in the

market value of the property under Ex.A1, in which price of

each cent was fixed at Rs.10,500/- and in the year, 2022, it

would be around Rs.3,00,000/- to Rs.3,50,000/- per cent. In

the circumstances granting the relief of specific performance

creates hardship to the defendant.

38. In the context of the discretion under Section 20 of the

Specific Relief Act, the Hon'ble Apex court also considered

whether it is appropriate to direct specific performance of a

contract relating to the transfer of immovable property,

especially given the efflux of time and the escalation of prices of

property.

39. Of course escalation of prices of property is no ground to

deny the relief of specific performance. But, the discretion to

direct specific performance of an agreement and that too after

elapse of a long period of time, undoubtedly, has to be exercised

on sound, reasonable, rational and acceptable principles. In the

instant case, as observe supra, the evidence on record clearly

depicts that the plaintiff is never ready to perform his part of the

contract notwithstanding the readiness shown by defendant to

execute sale deed.

40. While balancing the equities, one of the considerations to

be kept in view is as to who is the defaulting party. It is also to

be borne in mind whether a party is trying to take undue

advantage over the other as also the hardship that may be

caused to the defendant by directing specific performance. There

may be other circumstances on which parties may not have any

control. The totality of the circumstances is required to be seen.

Merely because, defendant admits execution of agreement,

plaintiff is not entitled to the relief of specific performance

unless he establishes readiness and willingness, financial

capacity etc., In view of the same, the judgment rendered in

P. Ramasubbamma vs. V. Vijayalakshmi and Ors. relied upon

by the learned counsel for appellant may not apply to the facts

of the case.

41. Thus, this Court holds that plaintiff cannot take

advantage over defendant and decreeing the suit by granting

relief of specific performance would cause great hardship to the

defendant.

42. Though it was argued about non-examination of the

defendant, defendant is an old lady aged about 82 years and is

not keeping good health. Medical certificate issued by

Dr. P. Vijay Babu, Government Hospital, Bhimavaram was

marked as Ex.B2. In view of the same, examination of the

defendant is not fatal to her case.

43. In view of the findings arrived at supra, in the considered

opinion of this Court the plaintiff is not entitled to decree of

specific performance. Plaintiff is entitled to relief of refund

amount and the decree passed by the Trial Court in that regard

is confirmed. Plaintiff/appellant failed to make out any case in

the appeal to interfere with the judgment of Trial Court. Thus,

the appeal deserves to be dismissed.

Point No.6

45. In the result, the appeal is dismissed. No costs.

As a sequel, pending miscellaneous petitions, if any, shall stand closed.

________________________________ JUSTICE SUBBA REDDY SATTI

Date : 06.05.2022

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THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI

APPEAL SUIT No.410 of 2005

06.05.2022

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