S. Kuldeep Singh vs Shri Banarsi Dass & Ors.
2000 Latest Caselaw 229 Del

ORDER

J.B. Goel, J.

1.This is an application under Section 28 of the Specific Relief Act, 1963(hereinafter called the Act) filed by the legal representatives of deceased defendant No.2 and defendant No. 5 seeking rescission of the agreement for sale dated 29/30.7.1980 and the decree dated 30.4.1984 passed thereon.

2. Nand Lal was the owner of property No.9, Sunder Nagar, New Delhi with leasehold rights in the land. After his death, the property devolved on his two sons, widow of a predeceased son Paras Ram and widow, three sons anda daughter of another predeceased son Din Dayal who were imp leaded as defendants No. 1 to 9 in the suit. These defendants had entered into anagreement forsale dated 29/30.7.1980 for the sale of the aforesaid property tothe plaintiff for a consideration of Rs. 14.00 lakhs out of which Rs. 1.40 lakhs was paid as advance at the time of agreement and balance amount of Rs.12.60 lakhs was payable at the time execution and registration of the sale deed. Sale was to be completed after obtaining permissions from various authorities when possession was also to be given except that possession of one garage was given at the time of agreement. Sale having not been completed, plaintiff filed the suit for specific performance on 11.2.1982. Defendants did not file their written statement and were proceeded under Order 8 Rule 10 CPC and the suit was decreed on April 30, 1984 against defendants No.1 to 8 only. An appeal filed was dismissed as time barred on 22.3.1985.An application under Order 9 Rule 13 CPC was also dismissedin default.

3. The plaintiff laid execution on 7.11.1990 for completing sale. Objections against the execution have been filed only by defendants No. 5 and 9. Defendant No. 2 died during these proceedings and his legal representatives have been substituted. This application under Section 28 of the Act has been filed on 24.4.1999.

4. The rescission is sought on the following grounds:-

1. The balance amount of Rs. 12.60 lakhs has not been paidor deposited within a reasonable time and so the plaintiff haslost his right for specific performance;

2. Since the passing of the decree, land rate in Delhi have increased from Rs. 2,000/- per sq. yds. to Rs. 13,860/- per sq. mtr. w.e.f. 1998 and thereby unearned increase in land price would be about Rs. 50.00 lakhs which will be inequitable, unjust and unconscionable if the defendants are required to pay;

3. The defendants are willing to refund the amount of Rs. 1.40 lakhs with interest @ 15% p.a. and reasonable compensation as may be deemed just and proper by the court;

4. Plaintiff's non-payment of balance amount has put the defendants to great loss; and

5. In the circumstances, it is just, proper and equitablet rescind the agreement and the decree.

5. Plaintiff in reply has denied and contested these contentions. Inter alia, it is pleaded that :-

1. No time was fixed by the Court for depositing the balance amount;

2. The balance amount is payable on the execution and registration of the conveyance deed by the defendants after fulfillling certain conditions;

3. The obligations cast on defendants have not been fulfillled by the mandas such there was no default on thepartofthe plaintiff;

4. Thedefendants are defaulters and Section 28 is notavailable to them;

5. The plaintiff has been ready and willing to perform his part of the agreement;

6. The application is not maintainable and is otherwise highly belated and time barred and misuse of the process of law;

6. I have heard learned counsel for the parties. Learned counsel forthe applicants/defendants has contended that the balance sale price should have been paid or deposited within a reasonable time which was not done and execution has been filed after a long time after decree was passed; the plaintiff thus has not shown readiness and willingness to perform the agreement and the deposit of balance sale price could not be allowed to be made now, that due to increase in land prices the burden of unearned increase to be paid to the lessor for transfer of the leasehold rights has mounted to over Rs. 40.00 lakhs which it will be unjust and inequitable for the defendants to pay at this stage; non-payment of balance amount has also otherwise put the defendants to loss as if it had been put in a fixed deposit account at the rate of interest of 12% per annum, the amount would have mounted to over Rs. 2.00 crores; in the circumstances the completion of the sale at the belated stage would be unjust and inequitable and the circumstances justify to rescind the contract and the decree.

7. Whereas learned counsel for the plaintiff has disputed these contentions. He has contended that provisions of Section 28 are not attracted as it is not the plaintiff who is at default but the default is on the part of the defendants; they had to complete the sale after obtaining the requisite permissions which they did not do, the question of the plaintiff making payment of the balance amount would have arisen after the defendants had fulfillled their obligations first. The defendants being in default, are not entilted to invoke Section 28 of the Act.

8. Section 28 of the Act, so far as relevant here, reads as under:-

"28. Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific performance of which has been decreed,- (1) Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchaser or lessee does not, within the period allowed by the decreeorsuchfurther periodas the court may allow, pay the purchase money or other sum which the court has ordered him to pay, the vendor orlessor may apply in the same suit in which the decree is made, to have the contract rescinded and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.

* * *

9. Under this Section, failure of the purchaser to pay the sale price as directed by the decree or non seeking for extension of the period, the seller is entitled to seek cancelation of the contract. In other words, a person can apply for rescission of contract or a decree if there is "default" on the part of the purchaser (or lessee) and such a default can be postulated only when the Court by its decree has appointed time for the performance of the obligations under the decree by the purchaser and obviously where no such time is fixed or the purchaser is not to anything first in the sequence of mutual obligations under the contract or the decree, no question of default on his part arises and so there can be no basis for application of this Section. (See Hungerford Investment Trust Ltd. Vs. Haridas Mundhra & Ors. ). The basis for this provision is that time is presumed not to be of the essence of the contract for the purchase of immovable property and a Court, may, therefore, relieve a party who has failed to pay the purchase money within the stipulated time or the time fixed by the Court. By this section, the non-defaulting vendor is enabled to file an application for rescinding the contract and the decree against the defaulting party. It does not enable a party to seek rescission of the contract and the decree where the himself is a defaulter. A person who himself is a defaulter cannot claim equity and cannot have recourse under this provision.

10.In considering whether a person is willing to perform his part of the contract,the sequence in which the obligations under the contract and/or the decree are to be performed must be taken into account. If,therefore, under the terms of the contract, the obligations of the parties have tobe performed in a certain sequence, one of the parties to the contract cannot require compliance with the obligations by the other party without in the first instance performing his own part of the contract, which in the sequence of obligations is performable by him earlier. (Nathulal Vs. Phoolchand ).

11. The question thus is, what is the sequence of the obligations under the contract? The Court had not fixed any such sequence of obligations while passing the decree of specific performance. The obligations of the parties have to be ascertained from the contract itself. The terms of the agreement for sale have been pleaded in the plaint. The defendants No. 1 to 8 had agreed to sell the property for a consideration of Rs. 14.00 lakhs out of which the defendants had received Rs. 1.40 lakhs as advance; (2) the balance amount of Rs. 12.60 lakhs was payable to the defendants at the time of execution and registration of the requisite conveyance deed and against simultaneous delivery of possession of the property (except one garage, possession of which was given at the time of agreement to sale); (3)for completing the transfer, the defendants were obliged to (i) apply to the L & DO/Lessor, for grant of permission to sell the aforesaid prperty to the plaintiff and pay unearned increase in land price to the Lessor; (ii) to seek permission of the Competent Authority under the Urban Land (Ceiling & Regulation) Act, 1976 (ULCRA) to sell the property; (iii) to obtain Income Tax clearance certificates; (iv) to obtain Estate Duty clearance in respect of the share of deceased D in Dayal; (v) to satisfy the plaintiff of co-compliance of these within a period of one month of receipt of these permissions;(4)to execute and get registered a conveyance deed free from encumbrances when the balance amount of Rs. 12.60 lakhs was to be paid by the plaintiff before the Sub Registrar (Assurances), New Delhi and the defendants were to hand over vacant possession of the property after discharging liability in respect of house tax, lease money, electricity and water charges or other dues upto the date of delivery of possession to the plaintiff.

12. The terms of contract clearly show that nothing was to be done by the plaintiff till the defendants had obtained the permissions and clearances from various authorities and the defendants were in a position to get the sale deed executed and registered with clear title in favour of the plaintiff and possession to be given simultaneously when the balance amount would be payable by the plaintiff. It is not the case of the defendants pleaded in this application that they had performed their obligations envisaged in the agreement for sale. In the application, the defendants have alleged that the plaintiff and not paid the balance amount. There was no such prior obligation on the part of the plaintiff envisaged in the contract to make payment would have arisen after the defendants were ready and willing and in a position to the knowledge of the plaintiff to execute the conveyance deed duly registered before the Sub Regitrar and simultaneously ready to hand over vacant possession. The defendants neither informed the plaintiff nor have so claimed. The authorities relied on behalf of the defendants are not relevant as they deal with the cases where default was on the part of the vendee in not making the payment within the stipulated period.

13.Under Article 136 of the Limitation Act, 1963, the period oflimitation for execution of the decree for specific performance is 12 years from the date "when the decree becomes enforceable or where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods when default in making the payment of delivery in respect of which execution is sought, takes place". The defendants never approached the Court that they were ready and willing to complete their part of the contract nor sought direction against the plaintiff to make payment of the balance sale price. Unless the defendants completed their obligations, the obligations on the part of the plaintiff would not arise. Thus, no default has taken place on the part of the plaintiff. And on the other hand, it is the defendants who are at default. As defaulters they are not entitled to invoke Section 28 of the Act. No one can take benefit of his own faults and defaults.

14. This application thus has no merit. The same is hereby dismissed with costs' assessed at Rs. 3,000/-.