The Appeal vs Chunduru Narasimha Rao 1
2023 Latest Caselaw 3196 AP

            HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                       APPEAL SUIT No.98 OF 2010

JUDGMENT:

1. The appeal, under Section 96 of the Code of Civil Procedure,

1908, is filed by the appellant/plaintiff challenging the decree and

judgment dated 04.11.2009 in O.S. No.16 of 2006 passed by the

Additional District Judge-cum-Family Court, Nellore (for short,

'trial court').

2. The parties will hereinafter be referred to as arrayed before the

trial court.

3. The plaintiff's claims in the plaint are summarized as follows:

(a) The defendant agreed to sell the schedule property for

Rs.19,00,000/- to the plaintiff. An advance payment of

Rs.1,00,000/- was made, and a sale agreement was executed

on 04.03.2004. The terms of the agreement stipulated that

the defendant would ensure the eviction of tenants from the

ground floor shop rooms, while the plaintiff would be

responsible for evicting the tenant on the first floor. After

demolishing the entire house, the plaintiff was ready to pay

the sale consideration of Rs.8,00,000/- to the defendant At

the time of registration, agreed to pay the balance amount of

Rs.10,00,000/-. However, the defendant failed to take any

action to evict the three shop room tenants or vacate the

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portion of the house in their possession, hindering the

execution of a registered sale deed in favor of the plaintiff. The

first-floor tenant provided conflicting statements regarding her

obligation to vacate the premises. In an abundance of caution,

the plaintiff informed the defendant about this on 24.06.2004.

In response, the defendant agreed to extend the time for

executing the registered sale deed and handed over the title

deeds. Consequently, an endorsement was made on the first

and third pages of the agreement on the same date, extending

the deadline until 20.07.2004.

(b) Despite the agreement, the defendant failed to appear for the

execution of a registered sale deed. The plaintiff sent a notice

urging the defendant to collect the remaining sale

consideration and execute the deed, which the defendant

received and responded to, stating that the sale agreement

dated 04.03.2004 had been canceled due to the plaintiff's

failure to fulfill his contractual obligations. Subsequently, the

plaintiff sent another notice on 26.10.2005, demanding the

defendant to fulfill his contractual obligations and execute a

registered sale deed. In reply, the defendant reiterated their

previous stance in a letter dated 16.11.2005. The plaintiff

asserts his readiness and willingness to fulfill his part of the

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contract, while the defendant failed to fulfill his part of the

contract.

4. In the written statement, the defendant refuted the allegations

made in the plaint. He admitted to executing the sale agreement

and receiving an advance sale consideration of Rs.1,00,000/- from

the plaintiff. However, he contended that the plaintiff was not pre-

pared and willing to fulfill his contractual obligations. According

to the terms of the agreement, it was the plaintiff's responsibility

to evict the first-floor tenant. Nonetheless, the plaintiff failed to

take any action to remove the said tenant, impeding the registra-

tion of a regular sale deed in his favour. The defendant also in-

formed the plaintiff about the first-floor tenant filing R.C.C.

No.6/1988 with the Rent Controller, Gudur, before entering into

the sale agreement and provided a copy of the court's order. The

defendant urgently needed money to finance his daughter's wed-

ding and, since the plaintiff failed to fulfill his contractual obliga-

tions, the defendant had to arrange funds through interest to per-

form the wedding. In May 2004, the defendant managed to evict

the tenants occupying the ground floor. Despite making several

demands for the payment of the remaining sale consideration and,

the plaintiff did not respond positively. Due to the plaintiff's fail-

ure to fulfill his obligations, including securing the balance sale

consideration and evicting the first-floor tenant on time, the de-

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fendant requested an extension of the deadline from 30.07.2004

to 20.07.2004 to receive the balance sale consideration.

5. Based on the above pleadings, the trial court framed the following

issues:

(1) Whether the plaintiff is entitled to the specific perfor-

mance of the agreement of sale dated 04.03.2004?

(2) Whether the plaintiff is entitled to delivery or possession of the plaint schedule property?

(3) To what relief the plaintiff is entitled?

6. During the trial, on behalf of the plaintiff, P.Ws.1 to 4 were exam-

ined and marked Exs.A1 to A15. On behalf of the defendant,

D.Ws.1 to 3 were examined and got marked Exs.B1 and B2.

7. After completion of the trial and hearing the arguments of either

side, the suit was decreed without costs, directing the defendant

to refund the advance amount of Rs.1,00,000/- to the plaintiff

with interest at 18% per annum from the date of Ex.A2-Sale

Agreement, i.e. on 04.03.2004 till the date of realization. Aggrieved

by the judgment and decree, the plaintiff filed the present appeal.

8. The appellant's counsel argues that the trial court failed to prop-

erly interpret the Ex.A2 Agreement of Sale. The crucial aspect of

the agreement is that the respondent/defendant was obligated to

ensure the eviction of tenants from the three shop rooms and ei-

ther register the sale deed with the building or demolish the build-

ing. The appellant, on the other hand, had to pay Rs.8,00,000/-

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after demolition of the building and the balance at the time of reg-

istration. The respondent was supposed to fulfil his obligation and

inform the appellant about the eviction of the tenants, thereby

enabling the appellant to fulfil his part of the contract. The coun-

sel further asserts that the trial court should have recognized that

the time was extended to allow the respondent to provide vacant

possession of the ground floor and provide the address of the up-

stairs tenant. However, the respondent failed to fulfil his obliga-

tion even during the extended period. As a result, the appellant is-

sued Ex.A.9 notice dated 19.07.2004 to the respondent.

9. The appellant's counsel further argues that the trial court, in

paragraph 12 of its judgment, concluded after analyzing and

evaluating the evidence that the defendant failed to prove the evic-

tion of the three tenants on the ground floor and register the sale

deed, the trial court erred by not granting the specific performance

of contract. The counsel also contends that the trial court deter-

mined that the appellant/plaintiff did not violate the terms of

Ex.A2 and Ex.A3, which demonstrate his good faith. The appellant

issued Ex.A9 and Ex.A10 notices, and the respondent did not pro-

vide any notice stating that he had fulfilled his obligations and

that the appellant should pay the balance consideration to regis-

ter the sale deed. Therefore, the counsel argues that the suit

ought to have been decreed. Additionally, the counsel submits

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that the trial court dismissed the suit solely on the ground that

the purpose of selling the property was defeated, but it ought to

have recognized that the failure of the sale's purpose is not a le-

gally valid reason to deny relief to the plaintiff.

10. Per contra, the learned counsel for the respondent/defendant

supported the findings and observations of the trial Court.

11. Now, the points that arose for consideration are:

1) Whether the trial Court erred in not granting the relief of specific performance of agreement of sale dated 04.03.2004?

2) Whether the judgment of the trial Court needs any interfe- rence?

POINT Nos.1 & 2:

12. There is no dispute concerning the proposition that a suit for a

specific performance burden is always on the plaintiff to prove and

aver that he is always ready and willing to perform his part of the

contract throughout. Mere taking a plea in the plaint is not suffi-

cient; the plaintiff should prove, with cogent evidence, his readi-

ness and willingness to perform his part of the contract at all ma-

terial times, i.e. from the date of the contract till the date of the

suit. It is also settled law that the grant of decree for specific per-

formance is a discretionary relief. Undoubtedly, discretion has to

be exercised judicially and not arbitrarily.

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13. Before considering the rival contentions raised on behalf of both

sides, it is relevant to refer to the admitted facts born out from the

record.

14. The defendant's mother, Radha Bayamma, was the original owner

of the plaint schedule property, and the defendant got it through a

Registered Will, i.e. Ex.A1 dated 17.01.1966, executed by his

mother. The defendant agreed to sell the plaint schedule property

for Rs.19,00,000/- and received a sum of Rs.1,00,000/- towards

advance sale consideration and executed Ex.A2-Sale Agreement

dated 04.03.2004. As per the contents of Ex.A2-Agreement, the

defendant agreed to sell the scheduled property to meet his family

expenses and the marriage expenses of his daughter. The plaintiff

had to pay the balance sale consideration of Rs.18,00,000/-

within four months from the date of execution of the sale agree-

ment, i.e. on or before 03.07.2004, and in case he failed to do so,

he had to forego the advance sale consideration paid to the defen-

dant. Similarly, if the defendant fails to execute the Registered

Sale Deed within the above-stipulated date, he has to pay

Rs.2,00,000/- to the plaintiff. Under Ex.A3 endorsement, the time

for payment of balance sale consideration by the plaintiff and to

get the Registered Sale Deed from the defendant was extended

from 03.07.2004 to 20.07.2004.

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15. The intention to make time stipulated for payment of balance con-

sideration will be considered the essence of the contract where

such intention is evident from the express terms or the circum-

stances necessitating the sale set out in the agreement. Even if

the urgent need for the money within the specified time is not set

out, if the words used clearly show an intention of the parties to

make time the essence of the contract, regarding payment, time

will be held to be the essence of the contract.

16. At the cost of repetition, it should be noted that whether time is

an essence of the contract would depend on the facts and circum-

stances of each case. In this case, after taking into consideration

the terms of the contract, the conduct of the parties and other ma-

terial placed before the Court, this Court views that as per the

terms of the agreement, time is the essence of the agreement and,

thereby, the plaintiff had taken steps to get an extension of the

time by way of Ex.A3 endorsement.

17. In Chunduru Padmavati Vs. Chunduru Narasimha Rao 1, the

Combined High Court of Andhra Pradesh at Hyderabad, held as

under:-

"7. It is well settled that in the case of contracts relating to the sale of immovable property, generally, time is not regarded as the es- sence of the contract. It is, however, open to the parties to make time the essence of the contract by making express provisions on that behalf in the contract. It can also be inferred from the sur-

2000(1) ALT 613

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rounding facts and circumstances of the case. Even though time was not originally made the essence of the contract, it can be made the essence of the contract by subsequent notice. In Chandi Rani v. Kamal Rani, a Constitution Bench of the Supreme Court held that even where time is not of the essence of the contract, the plaintiff must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the sur- rounding circumstances including the express terms of the con- tract, nature of the property and the object of making the contract. This principle was reiterated in the recent decision of the Supreme Court in K.S. Vidyanadam v. Vairavan, 1997 (2) Supreme 597, where the Apex Court, in keeping with the changing times, has made a bold departure from the traditional rule that time is not of the essence of the contract in the case of immovable proper- ties in the following words:

"Indeed we are inclined to think that the rigour of the rule evolved by Courts that time is not of the essence of the con- tract in the case of immoveable properties evolved in times when prices and values were stable and inflation was un- known-requires to be relaxed if not modified, particularly in the case of urban immoveable properties. It is high time we do so."

18. In Smt. Chand Rani (dead) by L.R.s. Vs. Smt. Kamal Rani

(dead)2, the Hon'ble Apex Court held that it is a well-settled prin-

ciple of law that in the case of the sale of immovable property,

time is not the essence of the contract. However, if the parties

agree to a specified time in the agreement to perform their part of

the contract, then time is the essence of the contract, and the par-

ties shall adhere to the same.

2 (1993) 1 SCC 519

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19. Section 55 of the Indian Contract Act of 1872 deals with the con-

sequences of failure to perform an executory contract at or before

the stipulated time provided by the first paragraph:

'When a party to a contract promises to do a certain thing at or be- fore 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 promise if the intention of the parties was that time should be of the essence of the contract.'

20. The plaintiff was examined as P.W.1. He also examined P.W.2-V.

Kuchelaiah, the Scribe of the Ex.A1-Agreement. Since the execu-

tion of the agreement is not in dispute, the evidence of P.Ws.1 and

2 need not be referred to in detail.

21. It is undisputed that according to the terms of Ex.A1 Agreement,

there are three shop rooms on the southern side of the scheduled

property, and the defendant was responsible for evicting the ten-

ants from those shop rooms, while the plaintiff had to evict a ten-

ant on the first floor. The agreement also stipulated that after

evicting the tenants, the defendant would execute the sale deed ei-

ther by demolishing the existing structures or keeping them in-

tact, and would pay all the applicable taxes such as house tax,

water tax, and electricity charges.

22. The plaintiff, as P.W.1, testified that the tenant on the first floor,

K. Varalakshamma, promised to vacate the premises based on the

plaintiff's representation and request. The plaintiff claimed that he

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intended to raise a new building and had assured Varalak-

shamma of providing an equal portion in the new building or ar-

ranging a comfortable alternative premises for her. Relying on Va-

ralakshamma's promise, the plaintiff intended to register the sale

deed as a vacant site to reduce the stamp duty. However, upon

close examination of the plaint's content, there is no indication of

such an assurance made by Varalakshamma. In contrast, Ex.A9

Notice dated 19.07.2004, issued by the plaintiff, states that the

defendant did not inform him about a serious dispute between

himself and the upstairs tenant. The notice mentions that the

tenant filed CMA.No.15/1996, challenging the orders issued in

R.C.C. No.6/1988. Ex.A8, a copy of the order in R.C.C.

No.6/1988, reveals that the defendant filed an eviction petition

against Kancherla Varalakshamma, citing default as the ground

for eviction and the petition was allowed. The evidence on record

indicates that the tenant filed CMA.No.15/1996, contesting the

orders passed in R.C.C.No.6/1988. The plaintiff's case does not

suggest that the tenant withdrew CMA.No.15/1996 due to assur-

ances made by the plaintiff. Both parties made reciprocal prom-

ises as stated in the agreement. Section 51 of the Indian Contract

Act, 1872 stipulates that when a contract consists of reciprocal

promises to be simultaneously performed, no promisor needs to

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fulfil their promise unless the promisee is ready and willing to ful-

fil their reciprocal promise.

23. As seen from the record, the plaintiff has not produced any evi-

dence to demonstrate that he took steps to evict the tenant as he

had undertaken. Nothing on the record to suggest that the plain-

tiff fulfil his part of the contract.

24. According to the agreement terms, the defendant was responsible

for taking steps to evict the tenants occupying the southern por-

tion of the scheduled property. The defendant, as D.W.1 testified

that he successfully evicted the tenants from the three shop

rooms on the ground floor by May 2004, incurring significant ex-

penses. To support his claim, he examined his wife as D.W.2 - Re-

vathi Bai, who corroborated his statement. D.W.3 - Shaik Khader

Basha also supported the version of DWs.1 and 2. However, the

trial Court, after evaluating the evidence of D.Ws.1 to 3, con-

cluded that the defendant did not provide any documentary evi-

dence to substantiate the eviction of the three tenants from the

shop rooms located in the southern portion of the ground floor.

Consequently, the trial Court did not accept the testimony of

D.Ws.1 to 3. The trial Court's said finding is not questioned by the

defendant by filing cross objection or appeal. The said finding

cannot be fault with.

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25. It is evident that both parties agreed to perform their respective

obligations on or before July 20, 2004. However, they failed to ful-

fil their part of the contract. Evicting tenants from tenanted prem-

ises involves a legal process, and specific procedures are outlined

in the Rent Control Act for tenant eviction. It cannot be reasona-

bly expected that either the land owner or the plaintiff (P.W.1)

would have full control over evicting the tenants from the prem-

ises. In the absence of specific evidence, it would be unfair to

blame the parties for not fulfilling the contract terms. There is no

indication that the defendant deliberately avoided taking steps to

evict the tenants from the ground floor. The plaintiff did not ex-

press willingness to obtain a registered sale deed from the defen-

dant despite the defendant's failure to fulfil the condition of ten-

ants eviction. The primary requirement stipulated in Ex.A1

Agreement was the eviction of tenants from the scheduled prem-

ises within the stipulated time and the defendant intended to bear

the marriage expenses of his daughter with the consideration

amount. In the light of the well settled principles of law referred to

in the preceding paragraphs, this Court views that the parties

agreed to a specified time in the agreement to perform their part of

the contract and as such, the parties made time the essence of

contract. Thus, it is clear that both parties failed to fulfil their part

of the contract in terms of tenants eviction within the time frame.

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Consequently, this Court holds that both parties failed to fulfil

their obligations, but they cannot be blamed since the eviction

process involves legal complexities. The plaintiff examined P.W.3

and P.W.4 as witnesses and produced documentary evidence to

demonstrate his financial capacity to pay the balance amount.

This evidence does not significantly contribute to resolving the

dispute since the defendant's main contention was not that the

contract could not be performed due to the plaintiff's lack of

funds. Despite the plaintiff's ability to demonstrate his financial

capacity, the contract could not be performed due to the non-

fulfilment of conditions by both parties within the agreed time

frame. As the parties did not anticipate the contingency of failure

of tenants eviction, the trial Court correctly denied the discretion-

ary relief of specific performance of the agreement, as neither

party was at fault for non-performance due to the involvement of

legal processes.

26. I find no good ground to differ with the finding with the trial

Court. The finding recorded by the trial Court does not call for any

interference.

27. In the light of the preceding discussion, I find no merits in the

appeal, and it is accordingly dismissed, but in the facts and cir-

cumstances of the case, no costs.

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28. Miscellaneous petitions pending, if any, in this Appeal shall stand

closed.

__________________________________ JUSTICE T. MALLIKARJUNA RAO

Date: 16.06.2023 MS/SAK

A.S.No.98 of 2010

HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT No.98 OF 2010 Date: 16.06.2023

MS/SAK