THE HON'BLE Ms. JUSTICE B.S.BHANUMATHI
Appeal Suit No.415 of 2017
JUDGMENT:
This appeal, under Section 96 CPC, is preferred against the
judgment and decree, dated 30.09.2016, passed in O.S.No.469 of
2014 on the file of the Court of XII Additional District Judge, at
Visakhapatnam, whereby the suit filed by the respondent/plaintiff
seeking specific performance of agreement of sale, dated
16.03.2013, or in the alternative, for refund of advance sale
consideration of Rs.2,80,000/- with interest and costs, was decreed.
2. Heard Sri N.Subba Rao, learned counsel for the appellant/
defendant and Sri D.Ravishankar Rao, learned counsel for the
respondent/plaintiff. The parties shall be referred as the plaintiff
and defendant hereinafter.
3. The case of the plaintiff, in brief, is as follows:
(a) The defendant is the absolute owner of the schedule
mentioned property, which is a zyroti dry land, in an extent of
Ac.1.40 cents. The defendant offered the said land for sale to the
plaintiff and the plaintiff accepted the said offer, and an agreement
of sale was entered into between the plaintiff and the defendant, on
16.03.2013. As per the said agreement of sale, the sale
consideration is fixed at Rs.11,500/- per Cent and on 16.03.2013, 2 BSB, J A.S.No.415 of 2017
the plaintiff paid an amount of Rs.2,80,000/- towards advance sale
consideration, by way of cheque bearing No.419524, dated
17.04.2013, drawn on Karnataka Bank Limited, Visakhapantam, for
an amount of Rs.1,40,000/- and a sum of Rs.1,40,000/- in cash and
the defendant acknowledged the same. As per the terms and
conditions of the sale agreement, the defendant has to execute
registered sale deed for the schedule mentioned property within
three months from the date of agreement of sale, in favour of the
plaintiff by conducting survey of the land for its exact extent. The
plaintiff has to pay the remaining balance on the date of
registration. Subsequently, the plaintiff has been intimating his
readiness and willingness for getting the registered sale deed for
the schedule mentioned property and the defendant used to
postpone the same on one pretext or the other. While so, the
plaintiff came to know that the defendant is making hectic efforts to
sell away the schedule property to third parties by ignoring the
agreement of sale entered into with the plaintiff. On 16.06.2014,
the plaintiff got issued a legal notice to the defendant that he is
ready with the remaining sale consideration for getting the
registered sale deed for the schedule mentioned property. On
23.06.2014, the defendant got issued reply admitting receipt of
advance amount and denying execution of the registered sale deed
and by raising false allegations. Even though the plaintiff is 3 BSB, J A.S.No.415 of 2017
intimating his readiness and willingness to perform his part of
agreement with remaining sale consideration and registration
expenses, the defendant is not coming forward to perform his part
of agreement. Even after receipt of legal notice, the defendant
refused to perform his part of contract. Hence, the plaintiff filed the
present suit.
(b) The defendant filed written statement denying the plaint
averments. It is further contended in the written statement as
follows:
The defendant intimated to the plaintiff through the mediators
that he is ready to execute the sale deed and demanded to pay the
balance sale consideration. But, the plaintiff postponed the same
on one pretext or the other. The defendant approached the plaintiff
several times to pay the amount and he is ready and willing to
execute the sale deed, however, as the plaintiff did not respond, the
amount paid by the plaintiff was forfeited. As the plaintiff committed
breach of terms & conditions of the agreement, the defendant is not
interested in executing the sale deed. The plaintiff has not
approached the Court with clean hands. There is no cause of action
for the suit. The suit is not maintainable. The plaintiff is neither
entitled to refund of the advance amount nor the relief of specific
performance. The suit is liable to be dismissed. 4
BSB, J A.S.No.415 of 2017
4. Basing on the above pleadings, the following issues were
settled for trial:
1. Whether plaintiff is entitled for specific performance of agreement of sale, dt.16.3.2013?
2. Whether the plaintiff is entitled to alternative relief if the relief of specific performance is not possible?
3. To what relief?
5. On behalf of the plaintiff, PWs 1 & 2 were examined and
exhibits A1 to A3 were marked. Exhibit A1 is the agreement of sale,
dated 16.03.2013, and exhibit A2 is the legal notice, dated
16.06.2014, issued by the plaintiff and exhibit A3 is the reply
notice, dated 23.06.2014, issued by the defendant. On behalf of the
defendant, DWs 1 & 2 were examined. No documents were marked
for the defendant.
6. On a consideration of the entire evidence, both oral and
documentary, and on hearing the submissions of the learned
counsel for the parties, the trial Court decreed the suit directing the
plaintiff to deposit balance sale consideration of Rs.13,30,000/- on
or before 30.11.2016 and the defendant is directed to execute
registered sale deed in the name of the plaintiff within three months
from the date of the said judgment.
7. The aggrieved defendant preferred this appeal. While
reiterating his pleaded case, the appellant further urged as follows: 5
BSB, J A.S.No.415 of 2017
The trial Court failed to appreciate that there is neither
pleading nor evidence before it for delay of more than a year to
issue notice under exhibit A1 after expiry of the agreed period. The
trial Court erred in decreeing the suit though the plaintiff is unable
to plead and establish that he is always ready and willing to perform
his part of contract. The trial Court decreed the suit on the basis of
evidence of DW1 who is an illiterate woman and who does not know
about the court proceedings. The trial Court failed to appreciate the
pleadings, evidence on record. The trial Court failed to appreciate
that there is willful negligence on the part of the plaintiff. The suit
for specific performance itself is not maintainable as time is the
essence of the contract. There are no lapses on the part of the
defendant.
8. The suit for specific performance has been resisted on the
ground that the plaintiff has not been ready to pay balance sale
consideration within the stipulated period of three months, and
thereby, the amount of advance is also forfeited, while admitting
the execution of the agreement and receipt of advance amount as
per the terms of contract. The plaintiff contends that the defendant
has to get the land measured and thereafter, the plaintiff has to pay
balance sale consideration, but, the defendant failed to discharge
his burden, and therefore, there are no laches on the part of the 6 BSB, J A.S.No.415 of 2017
plaintiff and that the plaintiff has always been ready and willing to
perform his part of contract.
9. It is settled law that mere stipulation in the agreement of sale
of immovable property as to time for performance of the contract
does not make the term 'essence' unless both parties intend to treat
the condition as 'essence' for performance of the contract. Both
parties agree on the fact that time for performance of the contract
is indicated in the agreement as three months. But the order of
obligations to be performed by both parties is also indicated in the
agreement itself. Therefore, it is relevant to mention the condition
regarding mutual obligations linked to the time framed fixed. The
vendor agreed to execute the registered sale deed, at the expenses
of the vendee, on receipt of balance sale consideration payable on
calculation of the total land available for sale on survey being
conducted immediately after payment of the sale consideration
within three months from the date of the agreement. The plaintiff
says that survey should be conducted first so that the amount of
remaining sale consideration can be ascertained. On the other
hand, the defendant contends that unless the plaintiff pays the
balance sale consideration within three months, his obligation to get
the land surveyed does not arise. The obligations are not clearly
spelt out with reference to the time. Is it the intention of the parties
that the balance sale consideration should be paid within three 7 BSB, J A.S.No.415 of 2017
months and survey should be conducted later on, or, survey should
be conducted within three months and get the land measured to fix
the total amount of sale consideration and thereafter, the obligation
to pay balance sale consideration would arise. Even, there is no
thorough cross-examination on this aspect to cull out the intention
of the parties. That apart, the parties did not intend to treat the
time as 'essence' by their conduct before or shortly after expiry of
the period of three months. No other term of contract would
indicate that time was treated as essence. It is only in the reply
notice, the defendant sated that the amount of balance sale
consideration is also forfeited since the plaintiff has not discharged
his obligation within the stipulated time.
10. Thus, when time is not essence of the contract, what is left for
both parties is to discharge their respective obligations in the order
mentioned in the agreement. Though it appears that survey to be
conducted on payment of balance sale consideration, it is not so
possible because the amount of balance sale consideration can be
determined only after actual survey to measure the land.
Therefore, unless survey is conducted, the plaintiff cannot pay the
balance sale consideration. Both parties say that they have been
asking the other party to perform the contract. In this regard, the
defendant examined DW2 as one of the mediators, who has
knowledge of the defendant asking the plaintiff to perform his 8 BSB, J A.S.No.415 of 2017
contract, as a mediator. That apart, he has also examined as a
witness to support the contention that the wife of the defendant was
examined as a witness for the defendant, i.e., DW1, since the
defendant is sick being an alcoholic. The plaintiff also examined
PW2 in support of his case that he used to ask the defendant to
perform his part of the contract, but the defendant used to
postpone the same on one pretext or the other.
11. In a suit for specific performance, the plaintiff has to establish
readiness and willingness throughout. It is represented by the
learned counsel for the appellant that the plaintiff failed to make the
deposit of balance of sale consideration of Rs.13,30,000/- as
directed by the trial Court in its decree, on or before 30.11.2016.
Except filing the suit on 07.08.2014 to get the agreement of sale,
dated 16.03.2013 performed, no evidence is placed by the plaintiff
to satisfy the Court that he has been ready and willing to perform
his part of the contract, in case, if it is allowed in his favour.
Moreover, even after passing of the decree, till now, the balance
sale consideration is not deposited. As such, this is a fit case to
allow the appeal.
12. Since the agreement does not contain any term to forfeit the
balance sale consideration, in any event, the defence taken about
its forfeiture is not sustainable. Therefore, the amount of advance 9 BSB, J A.S.No.415 of 2017
sale consideration received shall be refunded to the plaintiff with
reasonable rate of interest.
13. Insofar as rate of interest payable pending and post suit, the
same is governed by Section 34 CPC which gives discretion to the
Court to fix the reasonable rate of interest for the period pending
the suit, i.e., from the date of the suit to the date of decree,
whereas the post suit rate of interest shall not normally exceed 6%
per annum. Insofar as the rate of interest for the post-decree
period is concerned, the proviso to Section 34 CPC states that if the
contract has an element of commercial nature, the rate of interest
payable may exceed 6% per annum, but shall not exceed the
contractual rate of interest or where there is no contractual rate,
the rate at which moneys are lent or advanced by nationalized
banks in relation to commercial transactions.
14. In the present case, there is no term as to interest payable on
the amount of advance paid. In the plaint, the plaintiff prayed for
refund of the advance amount with interest at the rate of 24% per
annum from the date of payment to the defendant, i.e., from the
date of the agreement, till the date of realization. This Court is of
the view that the rate of interest claimed at 24% per annum is
reasonable insofar as pre-suit period is concerned. Even in relation 10 BSB, J A.S.No.415 of 2017
to the period pending the suit, this Court deems it fit to award the
same rate of interest, i.e., at the rate of 24% per annum.
15. In relation to post-decree period, since the discretion of the
court is limited to the prevailing rate of interest collected by the
nationalized banks on the amount lent or advanced and the rates of
interest payable on the monies lent or advanced by nationalized
banks vary from time to time; interest at the rate of 14% per
annum is considered appropriate. Thus, the defendant can be
directed to refund the advance sale consideration to the plaintiff
with interest payable at the rate of 24% per annum from the date
of the agreement till the date of decree and thereafter, at the rate
of 14% per annum from the date of decree till the date of
realization on the principal amount of Rs.2,80,000/-. To secure the
interest of the plaintiff, charge over the property can be created and
the same shall be intimated to the Sub-Registrar concerned to
protect the interest of the prospective buyers.
16. In the result, the appeal is allowed setting aside the judgment
and decree, dated 30.09.2016, passed in O.S.No.469 of 2014, and
decreeing the suit for refund of the advance sale consideration, and
directing the defendant to refund the advance sale consideration to
the plaintiff with interest payable at the rate of 24% per annum
from the date of the agreement till the date of decree, and 11 BSB, J A.S.No.415 of 2017
thereafter, at the rate of 14% per annum from the date of decree
till the date of realization on the principal amount of Rs.2,80,000/-
as well as the suit costs. In the facts and circumstances, this Court
holds that the liability shall remain as a charge over the suit
schedule property and a copy of this judgment shall be sent to the
Sub-Registrar concerned for the purpose of recording 'charge' over
the suit schedule property in the concerned registers.
Each party shall bear their own costs in the appeal.
Pending miscellaneous petitions, if any, shall stand closed.
________________ B.S BHANUMATHI, J 01st November, 2022 RAR
