Delhi High Court
M/S. Anant Raj Agencies Pvt. Ltd. vs M/S. Shringar Hotels Pvt. Ltd. on 22 December, 2015
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 14.12.2015
Pronounced on: 22.12.2015
+ CS(OS) 48/2006
M/s. ANANT RAJ AGENCIES PVT. LTD. ..... Plaintiff
Through: Mr. C.S. Vaidyanathan & Mr. Ravi Gupta,
Sr. Advs. with Ms. Biji Rajesh,
Ms. Anuradha Mukherjee, Mr. Abhijit
Mittal & Mr. Abhay Pratap Singh, Advs.
versus
M/s. SHRINGAR HOTELS PVT. LTD. ..... Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with
Mr. Amit Sanduja, Adv.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J.
1. This suit seeks, inter alia, specific performance, directing the
defendant to execute the Sale Deed in terms of the Agreement to Sell dated
16.09.2005 (Ex.PW1/3), in respect of the property admeasuring 16 Bighas
and 13 Biswas, bearing Mustatil No. 1 and 8, Killa No. 17/12 (2-04),
18/2/1 (1-08), 24 (4-16), 3/3 (2-08), 4 (3-08) with boundary wall, structure
of farm house, situated at Village Bijwasan, Tehsil Mehrauli, Vasant
Vihar, District South West Delhi (hereinafter referred to as the "suit
property") against the receipt of the balance sum in terms of the
Agreement.
2. It is the plaintiff‟s case that the defendant had agreed to transfer the
rights and title in the suit property to the plaintiff for a consideration of Rs.
16.99 crores. Accordingly, the plaintiff paid a sum of Rs. 2.5 crores as
earnest money in the following manner:
a) Rs.1 Crore vide cheque No. 481501 dated 06.09.2005 drawn
on State Bank of India, Chanderlok Building, Janpath, New
Delhi - 110 001;
b) Rs. 1.50 Crores in cash.
It is pertinent to mention that the defendant acknowledged the
receipt of this money in the Agreement itself, as well as in a separate
receipt (Ex.PW-1/4).
3. The plaintiff was to make a payment of the balance consideration of
Rs.14.49 crores on or before 20.01.2006. The plaintiff submits that it was
all along ready and willing to make the balance payment to the defendant
even before the date of execution of the Agreement; that on 14.12.2005, it
received a letter (Ex.P-1) which stated that although the defendant had
received an amount of Rs. 1.5 crores in cash, it had not received the cheque
of Rs. 1 crore and that therefore, the agreement stood cancelled; that upon
checking with its bankers, the plaintiff realised that the defendant had not
presented the cheque for encashment; that the defendants were illegally
trying to deny the receipt of the said cheque; that the plaintiff vide letter
dated 16.12.2005 (Ex.PW-1/9) replied to the letter dated 14.12.2005 and
denied its contents; that the plaintiff further offered to issue a fresh cheque
of the same amount in case the defendant had lost the original cheque. On
receiving no positive response from the defendant, the plaintiff preferred
the present suit. The suit was preferred before the arrival of the date of
performance of the Agreement by the plaintiff, i.e., 20.01.2006. The
plaintiff had filed the suit on 9th January, 2006 which was first listed on
12th January, 2006 wherein it was noted that :
"IA No.351/2006
Issue notice, returnable on 06.02.2006.
This is a suit for specific performance of an agreement to
sell dated 16.09.2005 whereby the suit property was allegedly
agreed to be sold by the defendant to the plaintiff. A sum of
Rs.2.5 crores was to be paid at the time of entering into the
agreement. The said amount was paid in two parts, one is by a
cheque of Rs.1 crore and Rs. 1.5 crores in cash. The learned
counsel for the plaintiff has referred to the agreement in
original which is filed at page 114 of the documents file and he
has also filed a receipt at page No.120 of the documents file to
indicate that both the cash amount as well as the cheque had
been received by the defendant and insofar as the plaintiff is
concerned all that was required to be done by it had been
done. On the other hand, the defendant was to get a no
objection certificate as indicated in clause No.3 of the
agreement by 31.12.2005 which the defendant has allegedly
failed and neglected to get. The learned counsel for the
plaintiff further pointed out that the balance amount of
Rs.14.49 crores was to be paid by the plaintiff by 20.1.2006
which it is ready and willing to do provided the defendant gets
the requisite no objection certification. It is in these
circumstances that the plaintiff has filed this application
seeking ex parte ad interim directions restraining the
defendant, its agents, representatives, employees from in any
manner selling, transferring, assigning, disposed of, alienating
or parting with possession of the property admeasuring 16
bighas and 13 Biswas bearing Mustatil No.1 and 8, Killa
No.17/2 (2-04), 18/2/2 (1-08), 24 (4-16), 3/3 (2-08), 4 (3-08)
with boundary wall, structure of farm house, situated at
Village Bijwasan, Tehsil Mehrauli, Vasant Vihar, District
South West Delhi in favour of anyone except the plaintiff in
terms of the agreement dated 16.09.2005.
After considering all the circumstances, I am of the
opinion that the plaintiff is entitled to ex parte orders.
Directions as prayed for and mentioned above are granted till
the next date of hearing.‖
4. The defendant‟s Written Statement denies the averments made by
the plaintiff. It is the defendant‟s case that the agreement is dated
06.09.2005 and not 16.09.2005 as claimed by the plaintiff, and the plaintiff
had forged and manipulated the date to read as „16‟ instead of „6‟ by
adding the numeral „1‟. The defendant submits that vide its letter dated
09.09.2005 (Mark DW-1/2), it had demanded the payment of Rs. 1 crore to
be made by the plaintiff; that since there was no response to the said letter,
it issued another letter dated 01.10.2005 (Mark DW-1/4), thereby
rescinding/revoking the Agreement to Sell; that the Agreement to Sell is
not a registered document as required under Section 17 of the Registration
Act, 1908 and thus has no sanctity in law.
5. Mr. C.S. Vaidyanathan, the learned Senior Advocate for the
plaintiff, submits that on 12th January, 2006, the plaintiff had categorically
stated before the Court that they are ready and willing to perform their part
of the agreement, provided the defendant gets the requisite no objection
certification and additional clearances.
6. The following issues were framed vide order dated 13th September,
2007:
(1) ―Whether the suit has not been signed, verified and filed by a
competent person? OPD
(2) Whether the agreement dated 16.09.2005 is a valid and
subsisting agreement between the parties? OPP
(2A) Whether the agreement to sell dated 16.09.2005 is barred by
the provisions of Section 17 of the Registration Act? OPD
(3) Whether the plaintiff was and is ready and willing to perform
its part of the obligations as per the purported agreement to
sell dated 16.09.2005? OPP
(4) Whether the plaintiff has paid a sum of Rs. 1 crore to the
defendant by way of a cheque as alleged in the plaint? OPP
(5) Whether the plaintiff is entitled to the relief of specific
performance as prayed for in the plaint? OPP
(6) Whether the plaintiff is entitled to the relief of permanent
injunction as prayed for? OPP.
(7) Any other relief.‖
7. Furthermore, on 13th August, 2008, this Court had recorded that the
plaintiff was ready and willing to pay the entire sale consideration to the
defendant subject to the defendant handing over the possession of the suit
property to the plaintiff, at which time the learned counsel for the
defendant had sought to get instructions. However, the defendant did not
agree to hand over possession of the suit property. The learned Senior
Advocate for the plaintiff states that there is no defence for non
performance of the agreement. The signatures on the photocopy of the
cheque were disputed and were referred to handwriting experts for
examination and both the experts have given their respective opinions.
8. The learned Senior Advocate for the plaintiff submits that it is only
the date of the Agreement that has been disputed by the defendant; that
insofar as the substance of the Agreement has been permitted, there can be
no dispute about it. The plaintiff had adduced the authority letter supported
by a resolution of the plaintiff-company dated 28th December, 2005 along
with the minute book which shows that the Mr. Anil Sarin and Mr. Pankaj
Nakra, Directors of the plaintiff-company, have signed, verified and filed
the suit and the affidavit supporting it. Therefore, this issue is returned in
favour of the plaintiff.
9. The substance of the agreement to sell is not in dispute. The
evidence of the plaintiff is reproduced as under:
8. I say that the receipt of the above mentioned consideration
was admitted and acknowledged by the Defendant in clause 2
of the said Agreement to Sell. The said amount of
Rs.1,00,00,000/- (Rupees One Crore only) vide cheque
No.481501 dated 6.9.2005 drawn on State Bank of India,
Chanderlok Building, Janpath, New Delhi - 110001; and
Rs.1,50,00,000/- (Rupees One Crore and Fifty Lacs only) in
cash were duly handed over by me to Shri S. Satinder Singh
Chhabra and S. Satinder Singh Chhabra accepted the same on
behalf of the defendant at the time of execution of the
agreement to sell in the presence of the witnesses namely Shri
Dilvir Singh and Shri Raghubir Singh Chabra. Shri S
Satinder Singh Chhabra further singed the photocopy of the
cheque as acknowledgement of the receipt of the above
cheque of Rs.1,00,00,000/- (Rupees One Crore only) in my
presence at the time of execution of the said agreement to sell.
The copy of the cheque bearing No.481501 dated 6.9.2005
drawn on the State Bank of India, Chanderlok Building,
Janpath, New Delhi 110001 for a sum of Rs.1,00,00,000/- with
the signature of Shri S. Satinder Singh Chhabra thereby
showing the receipt of the said cheque by the defendant is
exhibited as Exhibit - PW 1/4.
15.I say that the Defendant had received the amount of Rs.2.5
crores, out of which a sum of Rs.1.5 crores has already been
received by the Defendant in cash, and a cheque of the sum of
Rs. 1 crore was handed over to the defendant, which cheque
was not presented by the defendant for encashment in
violation of the said agreement dated 16.9.2005. The Plaintiff
had made out a cheque for a sum of Rs.1,00,00,000/- in the
name of the Defendant, and had handed over the said cheque
to the authorized signatory, and Director of the defendant
company Shri Satinder Singh Chhibber, which fact was duly
acknowledged by the said Shri Satinder Singh Chhibber of the
Defendant in the body of the Agreement to sell dated
16.9.2005 as also on the photocopy of the said Cheque by way
of inscription of his signatures in token of having received the
same from the Plaintiff. Despite the fact that the Defendant
received the said cheque for Rs.1,00,00,000/- from the
Plaintiff, the defendant with a view to rescind from the said
agreement t sell and to avoid their responsibility and liability
under the said agreement to sell, deliberately, wilfully and
fraudulently, did not present the cheque in clearing for
encashment, AND clandestinely took the stand that the
Plaintiff had not delivered the said cheque to them at the first
instant. While taking this stand the Defendant was blissfully
unaware that their representative Director Shri Satinder
Singh Chhabra had affixed his signatures on the photocopy of
the said cheque and had delivered the same to the Plaintiff in
token of his having received the said cheque in original on
behalf of the Defendant on the date of the agreement. The
Defendant Company has itself failed, and deliberately avoided
to encash the said cheque and therefore, no fault in this
regard can be attributed to the Plaintiff. I further say and
submit that the plaintiff is and has always been ready and
willing to make the payment of the balance amount of
consideration subject to the terms of the said agreement and
there was no question of its failing to make the payment of the
initial amount of Rs.1,00,00,000/- which amount it had
already paid by cheque and had made the necessary
arrangement to ensure that it would be encashed on
presentation.
Though the actual date of payment of the balance amount was
20.1.2006, the Plaintiff is even now ready and willing to make
the balance payment immediately against registration of the
concerned Sale Deed. I say that since the Defendant has
illegally, fraudulently and wilfully claimed cancellation of the
said Agreement to Sell in an attempt to deprive the Plaintiff of
its legitimate right to purchase the said property for which it
had already made advance payment of substantial sum of
money, the Plaintiff had no other option but to force specific
performance by way of instituting this suit before this Hon'ble
Court.
18.I say that the plaintiff had got the entire funds available
with it all through out from the date of execution of the
agreement to sell dated 16.09.2005 till date and is in a
position to make the entire payment even prior to the agreed
date and is ready and willing to incur all expenses for the
stamp duty required for execution of the Sale Deed and also
for its registration. There is absolutely no impediment at the
end of the Plaintiff in fulfilling its obligations. The Plaintiff
has all along been and is even today ready and willing to
perform its part of the obligation under the agreement to sell
dated 16.9.2005.
I say that the Plaintiff has always been ready and willing and
is still ready and willing to perform its obligations and, in
fact, the Plaintiff has written on two occasions by means of
registered A.D. letters to the defendant expressing its
willingness to make the balance payment and to get the sale
deed executed and it is the Defendant alone who
unnecessarily opted for delaying the performance of the
contract because greed had prevailed upon the Defendant due
to the rise in prices subsequent to the signing of the agreement
to sell dated 16.9.2005.‖
10. It is submitted that no cross-examination was carried out against the
said deposition. Accordingly, the statement of Mr. Pankaj Nakra remains
unrebutted and this issue is decided in favour of the plaintiff.
Issue No. 2A
11. Mr. C.S. Vaidyanathan submits that since the plaintiff was in
possession of Agreement to Sell which transferred the rights and interest in
the suit property, it was not required to be registered and that registration
would only be required when possession was actually transferred to the
plaintiff. He relies upon the dicta of the Supreme Court in the case of
S.Kaladevi vs. V.R. Somasundaram & Ors. (2010) 5 SCC 401, paras 11,
12, 13 and 16 read as under:
"11. Section 49 gives teeth to Section 17 by providing
effect of non-registration of documents required to be
registered. Section 49 reads thus:
―S.49.- Effect of non-registration of documents required
to be registered.- No document required by section 17
or by any provision of the Transfer of Property Act,
1882 (4 of 1882), to be registered shall-
(a) affect any immovable property comprised therein,
or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting
such property or conferring such power, unless it has
been registered:
Provided that an unregistered document affecting
immovable property and required by this Act or the
Transfer of Property Act, 1882 (4 of 1882), to be
registered may be received as evidence of a contract in
a suit for specific performance under Chapter II of the
Specific Relief Act, 1877 (3 of 1877), or as evidence of
any collateral transaction not required to be effected by
registered instrument."
12. The main provision in Section 49 provides that any
document which is required to be registered, if not registered,
shall not affect any immovable property comprised therein nor
such document shall be received as evidence of any
transaction affecting such property. Proviso, however, would
show that an unregistered document affecting immovable
property and required by 1908 Act or the Transfer of Property
Act, 1882 to be registered may be received as an evidence to
the contract in a suit for specific performance or as evidence
of any collateral transaction not required to be effected by
registered instrument. By virtue of proviso, therefore, an
unregistered sale deed of an immovable property of the value
of Rs. 100/- and more could be admitted in evidence as
evidence of a contract in a suit for specific performance of the
contract. Such an unregistered sale deed can also be admitted
in evidence as an evidence of any collateral transaction not
required to be effected by registered document. When an
unregistered sale deed is tendered in evidence, not as
evidence of a completed sale, but as proof of an oral
agreement of sale, the deed can be received in evidence
making an endorsement that it is received only as evidence of
an oral agreement of sale under the proviso to Section 49 of
1908 Act.
13. Recently in the case of K.B. Saha and Sons Private
Limited v. Development Consultant Limited, this Hon'ble
Supreme Court noticed the following statement of Mulla in his
Indian Registration Act, 7th Edition, at page 189:-
"......The High Courts of Calcutta, Bombay, Allahabad,
Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan,
Orissa, Rangoon and Jammu & Kashmir; the former Chief
Court of Oudh; the Judicial Commissioner's Court at
Peshawar, Ajmer and Himachal Pradesh and the Supreme
Court have held that a document which requires registration
under Section 17 and which is not admissible for want of
registration to prove a gift or mortgage or sale or lease is
nevertheless admissible to prove the character of the
possession of the person who holds under it......"
This Court then culled out the following principles:-
"1. A document required to be registered, if unregistered is
not admissible into evidence under Section 49 of the
Registration Act.
2. Such unregistered document can however be used as an
evidence of collateral purpose as provided in the proviso
to Section 49 of the Registration Act.
3. A collateral transaction must be independent of, or
divisible from, the transaction to effect which the law
required registration.
4. A collateral transaction must be a transaction not itself
required to be effected by a registered document, that is, a
transaction creating, etc. any right, title or interest in
immovable property of the value of one hundred rupees
and upwards.
5. If a document is inadmissible in evidence for want of
registration, none of its terms can be admitted in evidence
and that to use a document for the purpose of proving an
important clause would not be using it as a collateral
purpose."
To the aforesaid principles, one more principle may be
added, namely, that a document required to be registered,
if unregistered, can be admitted in evidence as evidence of
a contract in a suit for specific performance.
16. The issue before us is only with regard to the
admissibility of unregistered sale deed dated 27.2.2006 in
evidence and, therefore, it is neither appropriate nor
necessary for us to consider the contention raised by
learned counsel for the respondents about the
maintainability of suit as framed by the plaintiff or the
circumstances in which the sale deed was executed. If any
issue in that regard has been struck by the trial court,
obviously, such issue would be decided in accordance with
law. Suffice, however, to say that looking to the nature of
the suit, which happens to be a suit for specific
performance, the trial court was not justified in refusing to
admit the unregistered sale deed dated 27.2.2006 tendered
by the plaintiff in evidence.‖
12. Accordingly, this issue is returned in favour of the plaintiff.
13. In this regard, right from the day on which the suit was filed, the
plaintiff had averred his readiness and willingness to perform the contract
and even during the course of the proceedings, this aspect of readiness and
willingness, as reiterated by way of deposition of PW-1, was never in
question. In fact, on 13th August, 2008, this Court had categorically
recorded that the plaintiff was ready and willing to pay the entire sale
consideration to the defendant subject to the latter handing over the
possession of the suit property to the plaintiff. Admittedly, the issue too is
settled in favour of the plaintiff.
14. The Agreement to Sell as well as the receipt/acknowledgment dated
16.9.2005, which has been admitted by the parties, records that an amount
of Rs. 1.50 crore was paid in cash and Rs. 1 crore by way of a cheque
bearing No. 481501. Clearly, the amount is admitted to have been received
by the defendant. In the circumstances, to say that the monies were not
paid to or received by the defendant is without basis. This issue too is
returned in favour of the plaintiff.
15. This Court is of the opinion that once the Agreement has specifically
recorded the receipt of the payment, there can be no requirement of any
further acknowledgement.
16. The letters dated 09.09.2005 and 01.10.2005, which are stated to
have been sent by the defendant, seeking to call upon the plaintiff to pay
the disputed amount of Rs. 1 Crore of earnest money and restrain/rescind
the contract were sent to the Jhandewalan Extension address of the
plaintiff. At the outset, these letters have been denied by the plaintiff. The
address of the plaintiff recorded in the affidavit in support of the Plaint
pertains to Connaught Circus, Connaught Place, whereas the defendants
had their office in N-13, NDSC, Part-I. The first time the plaintiff
corresponded with the defendant at the Jhandewalan Extension address
was by a letter dated 24th November, 2005. There was no occasion for the
defendant to address any letter at the said address prior thereto.
Furthermore, it is noted that the aforesaid letters dated 09.09.2005 and
01.10.2005 have been inscribed on a plain sheet of the paper bearing no
recognition whatsoever with the defendant‟s organisation, whereas the
postal receipt, i.e., UPC is on the letter head of the defendant, showing its
address at 1, Curzon Road.
17. The plaintiff relies upon the judgment of this Court in State Bank of
India vs. H.C. Takyar (HUF & Ors.) dated 13th February in RFA
No.6/2004:-
―5. I completely agree with the aforesaid findings and the
conclusions of the Trial Court. At the outset, I must refer to
the decision of the Supreme Court in the case of Caltex
(India) Ltd. vs. Bhagwan Devi Marodia, AIR 1969 SC 405,
and the ratio of which judgment of Supreme Court lays down
that there cannot be extension of a lease, unless, an option to
extend the lease is exercised specifically within a period as
provided for, inasmuch as, time is the essence of the contract
in such cases and the tenant in equity cannot overcome the
consequences of neglect on his part and which could have
been avoided by reasonable diligence. I completely agree with
the findings and conclusions of the Trial Court as to the lack
of genuineness of the letter dated 6.4.1998 inasmuch as it is
inconceivable that a huge bank like State Bank of India, for
sending of such an important letter, would use the basis of
UPC, when hundreds and hundreds of letters everyday on
behalf of the bank are sent by the registered post AD. A letter
as important as the letter dated 6.4.1998 exercising an option
to renew a lease, therefore, cannot be said to be one which
would have been sent by UPC. More importantly no internal
correspondence or other documents of the bank have been
filed to show the decision to extend the lease and accordingly
send the necessary communication to the landlords.
Obviously, the concerned officers of the bank did not do their
homework and thereafter, having realized their mistake, this
letter dated 6.4.1998 was thereafter contrived. I may also add
that the argument as raised on behalf of learned counsel for
the appellant-bank that there is a mention of this letter in the
reply notice dated 29.9.1998 is an argument not only of
desperation but on the contrary it proves the fact that the
appellant-bank was trying to play fast and loose. This I say so
because even in the reply notice dated 29.9.1998 issued by the
appellant-bank to the landlords/respondents, there is no
specific date mentioned of the letter by which the option was
exercised. Obviously, by this date when the reply to notice
was sent, the UPC would not have been procured by the
concerned officer of the appellant-bank who must have been
in hot waters, therefore, this date was not mentioned in the
reply dated 29.9.1998. It is only when the UPC must have
been procured, that a specific date was mentioned in a
subsequent notice sent by the appellant-bank dated
19.12.1998. Such practices on behalf of a responsible bank
such as the appellant-bank needs to be very strongly
deprecated.‖
18. In Shiv Kumar v. Hansita, 171 (2010) DLT 346, this Court held as
under:
―8. It is a settled legal position that the abandonment of
service cannot be readily inferred. Abandonment of service is
a question of intention which can be gathered from the totality
of the facts and circumstances of each case. There has to be a
clear evidence on record to show that despite grant of
reasonable opportunity to the employee by the management,
he failed to join back his duties without any sufficient reasons
and therefore in the absence of any such cogent and
convincing evidence, voluntarily abandonment on the part of
the employee cannot be readily inferred. As per the
respondent management, the petitioner remained absent from
his duties w.e.f. 19.06.1992 without permission or leave and
was called upon to join back his duties vide letter dated
22.06.1992 which was proved on record by the management
as Ex. RW 1/1 with certificate of posting proved on record as
RW 1/II. On the failure of the petitioner to join back his duties
another letter dated 30.06.1992 was sent by the respondent
yet again through UPC thereby giving one last opportunity to
the petitioner to return back to his work latest by 7.7.1992,
failing which the necessary presumption would be drawn
against the petitioner that he had abandoned his services. Yet
another letter dated 8.7.1992 was sent by the respondent
management to the petitioner by UPC and this time an
amount of Rs.33,500/- was also sought to be returned by him,
which amount the respondent management found outstanding
against him. None of these letters were sent by the respondent
management through registered AD and on the other hand the
petitioner sent a demand notice dated 21.7.1992 through
registered AD which was replied by the respondent
management vide their reply dated 24.08.1992 wherein the
respondent management also gave reference of the above said
letters sent to the petitioner by UPC. The petitioner in his
rejoinder dated 3.9.1992 clarified to the respondent
management that such letters were never received by him. The
petitioner also sought to castigate the respondent in adopting
dubious means in obtaining some certificates of posting from
the post office to prove service of the said letters. No doubt
that under Section 27 of the General Clauses Act service
through UPC does give rise to a presumption but certainly
service through UPC is a frail piece of evidence. The
respondent management has failed to prove on record any
dispatch register or any other documentary evidence to show
that the said letters were dispatched by the respondent
management in their normal and ordinary course of business.
The petitioner who had put in 16 years of long service is not
expected to be thrown out of employment just based on three
UPC letters purported to have been sent to him requiring him
to join back his duties. Had the petitioner been not willing to
join back his duties, he would not have sent demand notices
just within a period of one-and-a-half month of his
termination and immediately thereafter having raised an
Industrial Dispute.‖
19. The defendant has failed to show that the said letters were recorded
on the despatch register or were sent in accordance with its normal practice
of posting letters. The defendant has not been able to prove that it generally
corresponded through UPC and not through registered AD post or speed
post. Incidentally, it was only while sending the letter dated 14.12.2005
that the defendant used registered post AD. The said letter was posted at
both the addresses i.e. Connaught Circus, Connaught Place and
Jhandewalan Extension address. In the circumstances, this Court does not
find the letters dated 09.09.2005 and 01.10.2005 to be credible.
20. On behalf of the defendant, Mr. Sandeep Sethi, the learned Senior
Advocate, submits that in a suit for specific performance of an agreement,
the plaintiff has to show that he was, at all times, including during the
pendency of the suit, ready and willing to perform his part of the contract;
that „readiness‟ means availability of requisite funds in the account; that
the plaintiff had not pleaded so. He refers to Section 16(c) of the Specific
Relief Act, 1963, which reads as under:
―16. Personal bars to relief.-Specific performance of a
contract cannot be enforced in favour of a person-
(c) who fails to aver and prove that he has performed or has
always been ready and willing to perform the essential terms
of the contract which are to be performed by him, other than
terms the performance of which has been prevented or waived
by the defendant.‖
21. Mr. Sethi further refers to Clause 2 of the Agreement whereby the
plaintiff was required to pay a total consideration of Rs.16.99 crore, out of
which Rs.1.50 crore was to be paid in cash and an amount of Rs. 1 crore
was to be paid by cheque, which was never handed over to the defendant.
He then refers to para 10 of the plaint, which reads as under:
―10. That since the defendant is now after the receipt of
Rs.2.5 crores, out of which a sum of Rs.1.5 crores has already
been received by the defendant in cash, and a cheque of the
sum of Rs.1 crore was handed over to the defendant, which
cheque is not being illegally presented by the defendant for
encashment, therefore, no fault in this regard can be made
attributable to the plaintiff. It is further submitted that since
the plaintiff was ready and willing to make the payment;
though the actual date of payment of the balance amount is
20.1.2006, but the plaintiff is even ready and willing to make
the balance payment immediately against registration of the
Sale Deed and since the defendant has illegal alleged the
cancellation for which it has no right to do so, therefore, the
necessity has arisen to file the present suit.‖
22. According to him, the non-receipt of the cheque had been duly
intimated to the plaintiff vide letter dated 14.12.2005. He submits that
despite this, the plaintiff failed to deliver the requisite cheque to the
defendant; that hence, in the absence of the cheque, there could be no
question of presenting anything for encashment; that insofar as the part
performance of the contract is concerned, it shows that the plaintiff never
had the funds to pay either Rs. 1 crore or the remaining Rs. 14.99 crore.
23. The learned Senior Advocate for the defendant submits that the
plaintiff failed to lead any evidence to show that it had the money at the
relevant time. He further refers to the evidence of one Deputy General
Manager of the plaintiff-Company, Mr. S.P. Berry, who deposed as under:
"3. That by following the settled practice, the plaintiff never
checked whether the cheque No.481501 dated 6.9.2005 drawn
on State Bank of India, Chanderlok Building, Janpath, New
Delhi issued to the defendant was encashed by the defendant
or not from 16.9.2005 till the date the letter dated 14.12.2005
was received by the plaintiff, inasmuch as the reconciliation
of the bank statements pertaining to the deposit as well as
encashment of the above cheque was to be done in the month
of January, 2006."
24. He submits that it is unlikely that a company would not bother
whether a cheque amount of Rs. 1 crore had been encashed or not, since it
is not a small amount. In his opinion, the contention that the Chief
Accounts Officer checked the bank statements only twice a year is
implausible. Effectively, it would mean that the Accounts Department of
the plaintiff-company had no work to do and they would tally the
statement in respect of the balance in the account only twice a year. He
contends that neither the Director nor the Chief Finance Officer of the
plaintiff-company brought forward any bank records to show that they had
the requisite amount of Rs. 1 crore in their bank account, let alone an
amount of Rs.14.99 crore to be paid subsequently; that in the absence of
the plaintiff producing any evidence in this regard, the Court shall, as a
logical corollary, draw an adverse inference against the plaintiff. He relies
upon the dicta of the Supreme Court in N.P. Thirugnanam (Dead) By LRs
v. Dr. R. Jagan Mohan Rao & Ors. (1995) 5 SCC 115 for the proposition
that it is for the plaintiff to show that at all times, he was both ready and
willing to perform his part of the obligation. In particular he relies upon
para 5 of the above judgement, which reads as under:
―5. It is settled law that remedy for specific performance is an
equitable remedy and is in the discretion of the court, which
discretion requires to be exercised according to settled
principles of law and not arbitrarily as adumbrated under
Section 20 of the Specific Relief Act 1963 (for short, 'the Act').
Under Section 20, the court is not bound to grant the relief
just because there was valid agreement of sale. Section 16(c)
of the Act envisages that plaintiff must plead and prove that
he had performed or has always been ready and willing to
perform the essential terms of the contract which are to be
performed by him, other than those terms the performance of
which has been prevented or waived by the defendant. The
continuous readiness and willingness on the part of the
plaintiff is a condition precedent to grant the relief of specific
performance. This circumstance is material and relevant and
is required to be considered by the court while granting or
refusing to grant the relief. If the plaintiff fails to either aver
or prove the same, he must fail. To adjudge whether the
plaintiff is ready and willing to perform his part of the
contract, the court must take into consideration the conduct of
the plaintiff prior and subsequent to the filing of the suit
alongwith other attending circumstances. The amount of
consideration which he has to pay to the defendant must of
necessity be proved to be available. Right from the date of the
execution till date of the decree he must prove that he is ready
and has always been willing to perform his part of the
contract. As stated, the factum of his readiness and
willingness to perform his 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 contract.‖
25. Mr. Sethi submits that the plaintiff has failed to meet the legal
requirement and the obligation to establish the fact that he had the
wherewithal to pay the amounts to the defendant. He also relies upon the
dicta of the Supreme Court in His Holiness Acharya Swami Ganesh
Dassji v. Sita Ram Thapar (1996) 4 SCC 526 wherein it was observed as
under:
―2. 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 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 plaintiff's part 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 no ready no 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 bit for the time which disentitles him as time is the
essence of the contract.‖
26. He then refers to the Agreement to Sell and the receipt to show that
numeral „1‟ (one) has been added to „6th September‟ and therefore, it has
been tampered with and is not the document on which the parties were ad
idem. He contends that the date of the cheque too has been written over
from 6th September, 2005 to 16th September, 2005 while there is no
corresponding endorsement by the parties in this regard as has been done
for Clause 8 of the Agreement. He submits that ordinarily when a cheque
is issued, the issuer always ensures that the said cheque amount is available
in his account and no prudent business organisation would block an
amount of Rs. 1 crore for an agreement yet to be entered into. Referring to
the receipt, he submits that there are two places where there is obvious
over-writing, which have been duly countersigned by the parties but the
addition of the numeral „1‟ (one), which is before the typed date of 6 th
September, 2005, does not bear the signature of the defendant; that the
typed date refers to 6th September and not 16th September, therefore, the
Agreement to Sell is not the document in which the agreement was entered
into between the parties and it cannot be admitted in evidence; that the
Agreement to Sell (Ex.PW1/3) is not the original document but one set-up
by the plaintiff. The learned Senior Advocate submits that there is no
explanation why the cheque issued was dated 6th September, 2005 when
the Agreement was of 16th September, 2005. Even the affidavit of PW-1
gives no plausible explanation in this regard. He draws the attention of the
Court to the resolution dated 28th December, 2005 to point out that that
resolution was passed only with respect to the filing of the present suit but
no such resolution has been placed on record to agree upon the purchase of
the suit property.
27. Mr. Sethi relies upon the letters dated 09.09.2005 (Mark DW1/2)
and dated 01.10.2005 (Mark DW1/4), which purportedly intimated the
plaintiff that the aforesaid cheque dated 06.09.2005 for an amount of Rs. 1
crore had not yet been received by the defendant. However, de hors the
said communication and without acknowledging the same, the plaintiff
wrote to the defendant by the letter of 24th November, 2005 (Ex. PW1/6)
that it had paid Rs.2.5 crore on 16.09.2005 and balance of Rs.14.49 crore
was to be paid on or before 24.01.2006 provided the requisite NOC and
other documents be obtained from the relevant authorities. However, Mr.
Sethi submits that no such clearance was required from the Income Tax
authorities. Incidentally, this letter was written two and a half months after
the Agreement. By letter of 14.12.2005 (Ex. P-1), the defendant had
intimated to the plaintiff that the latter was in serious default of the
agreement insofar as it had not given the required cheque of Rs. 1 crore
which was supposed to have been given to the defendant at the time of
signing of the Agreement. Accordingly, the agreement stood
cancelled/revoked since the plaintiff had defaulted in making the payment
as agreed. Upon a query being raised by the Court, Mr. Sethi states there
was no clause in the Agreement which stipulated that non payment of such
amount would automatically render the Agreement cancelled.
28. By a letter of 16.12.2005 (Ex. PW1/9), the plaintiff had
communicated to the defendant that in case they have lost their previous
cheque which was given to them of Rs. 1 crore, a fresh cheque could be
issued in lieu thereof, which could be immediately encashed. However,
Mr. Sethi submits that this itself proves that the plaintiff had never paid the
said amount nor did it intend to pay this amount, perhaps because it did not
have the requisite funds in its bank account; that had it intention to pay the
amount, it would have easily made a demand draft and attached it with the
said letter to establish their bona fides.
29. Mr. Sethi further submits that the Agreement dated 16.09.2005 is not
the one on which the parties agree, therefore, it is unenforceable in law.
He submits that the document on which the defendant had agreed was one
dated 06.09.2005, which was purportedly interpreted by the plaintiff as
16.09.2005, for reasons best known to the plaintiff, and the same cannot be
enforced by way of the present proceedings.
30. Mr. Sethi, the learned Senior Advocate, directs the Court‟s attention
to an extract of the letter dated 16.12.2005, which reads as under:
―Please note the agreement dated 6th September, 2005,
though written as 16th September, 2005 is still valid, subsisting and
binding upon the parties and you have no right to escape from the
obligations contained in the said agreement.‖
He submits that the letter is entirely silent about the date of the
Agreement having been wrongly mentioned as 16.09.2005. There is no
explanation in the document of 16.12.2005 as to how the document of
06.09.2005 was written as of 16.09.2005 and therefore, this plea is an
afterthought.
31. He further submits that issue No.2 does not lie since possession of
the property had never been handed over; that for the purposes of
determination of issue No.3, the plaintiff was required to show all along
that it had the wherewithal, i.e., it was ready and also willing to pay the
entire consideration amount starting from 6th or 16th September, 2005
whichever date is taken, till the tenure which was mentioned in the
Agreement. He argues that the plaintiff is required to demonstrate its
ability to pay the requisite amount by showing the bank statement or any
other financial instrument that established that the money is readily
available to fulfil the sale consideration immediately and throughout the
pendency of these proceedings, no such documents have been adduced.
32. In view of the aforesaid, Mr. Sethi insists that issue No. 5 should be
returned in the negative. He relies upon Section 20 of the Specific Relief
Act, 1963, which reads as follows:
―20. Discretion as to decreeing specific performance.--
(1) The jurisdiction to decree specific performance is discretionary,
and the court is not bound to grant such relief merely because it is
lawful to do so; but the discretion of the court is not arbitrary but
sound and reasonable, guided by judicial principles and capable of
correction by a court of appeal.
(2) The following are cases in which the court may properly exercise
discretion not to decree specific performance:--
(a) where the terms of the contract or the conduct of the
parties at the time of entering into the contract or the other
circumstances under which the contract was entered into are
such that the contract, though not voidable, gives the plaintiff
an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some
hardship on the defendant which he did not foresee, whereas
its non-performance would involve no such hardship on the
plaintiff; or
(c) where the defendant entered into the contract under
circumstances which though not rendering the contract
voidable, makes it inequitable to enforce specific
performance. Explanation 1.--Mere inadequacy of
consideration, or the mere fact that the contract is onerous to
the defendant or improvident in its nature, shall not be
deemed to constitute an unfair advantage within the meaning
of clause (a) or hardship within the meaning of clause (b).
Explanation 2.-- The question whether the performance of a
contract would involve hardship on the defendant within the
meaning of clause (b) shall, except in cases where the
hardship has resulted from any act of the plaintiff subsequent
to the contract, be determined with reference to the
circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree
specific performance in any case where the plaintiff has done
substantial acts or suffered losses in consequence of a
contract capable of specific performance.
(4) The court shall not refuse to any party specific
performance of a contract merely on the ground that the
contract is not enforceable at the instance of the party.‖
33. He submits that in exercising the discretionary powers for decreeing
specific performance of the Agreement, this Court would need to
determine whether the conduct of the plaintiff is unblemished, which
according to him is not the case owing to the conflicting position taken by
the plaintiff apropos the date of the document being 6 th or 16th September,
2005, in addition to the fact that no payment of Rs. 1 crore had been made
till date. He submits that it is settled law that where the purchaser has paid
less than 10% of the consideration amount, the Courts would not be
inclined to grant specific performance. He relies upon the judgment in the
case of Jinesh Kumar Jain v. Iris Paintal & Ors. ILR (2012) V DELHI
678 wherein it was held by this Court that specific performance of a
contract may be decreed only where the plaintiff has done substantial acts
in furtherance of the contract; that where the acts are not substantial, i.e.,
merely 5% or 10% of the consideration has been paid, the plaintiff is not
entitled to the discretionary relief of specific performance.
34. Mr. Sethi submits that contrary reports have been filed by two hand
writing experts, who examined the signatures appended to the cheque
dated 6th September, 2005. Therefore, Mr. Sethi contends that the
evidence sought to be adduced by the plaintiff that the signature of the
Director of the plaintiff-company was genuine ought not to be relied upon
in view of the Supreme Court‟s dicta that such opinions of hand writing
experts have to be proven by other corroborative evidence. He relies upon
the judgment in Bhagwan Kaur v. Maharaj Krishna Sharma (1973) 4
SCC 46. He submits that no such corroborative evidence hs been adduced
in this regard. The handwriting experts could not determine as to who had
received the cheque and signed on the photocopy of the cheque nor could
the experts determine as to who had added the numeral „1‟ to the
agreement dated 6th September, 2005.
35. Mr. Sethi further once again avers that the fundamental requirement
in a suit seeking specific performance of a contract under the Specific
Relief Act, 1963 is that plaintiff should be ready and willing to perform his
part of the contract at all times throughout the pendency of the suit and
must so prove otherwise it will be fatal to his cause. For his purpose, the
plaintiff would be required to show (i) availability of funds at all times; (ii)
financial wherewithal at all times and (iii) willingness to perform his part
of the contract. He relies upon Section 16 of the Act. In support of his
contention, he relies upon the following judgements:
(i) Smt.Laxmi Devi Vs. Shri Mahavir Singh, RFA 556 of 2011,
decided on 01.05.2012 wherein it was held as under:
―9. I am of the opinion that the respondent/plaintiff is also
not entitled to specific performance because pleading and
proving of readiness and willingness is a sine qua non in a
suit for specific performance. Readiness and willingness is by
means of showing capacity to pay balance sale consideration.
Of course, depending on facts of each case, it may not be
necessary for amounts being immediately available to be
shown, however, the financial capacity of the buyer (i.e. the
respondent/plaintiff) has necessarily to be established on
record and in the absence of financial capacity to pay the
balance consideration it cannot be said that
respondent/plaintiff was always ready and willing to perform
his part of the contract. In the present case, there is no dispute
that the respondent/plaintiff filed absolutely no document
whatsoever of his financial capacity to pay the balance sale
consideration. No bank account was filed, no income tax
returns were filed and no details of any properties or other
means by which the respondent/plaintiff had to pay the
balance sale consideration, were filed. I therefore, hold that
the respondent/plaintiff was not ready and willing to perform
his part of the contract being not in a position to pay the
balance sale consideration and was thus not entitled to the
relief of specific performance.
10. Learned counsel for the respondent/plaintiff sought to
place reliance upon the judgment of the Supreme Court in the
case of Azhar Sultana Vs. B. Rajamani and Ors. 2009 (17)
SCC 27 to argue that there is no requirement to file proof with
respect to the balance consideration. Attention of this Court is
drawn to para 31 of the judgment which reads as under:-
31. We are, however, in agreement with Mr. Lalit that
for the aforementioned purpose it was not necessary
that the entire amount of consideration should be kept
ready and the plaintiff must file proof in respect thereof.
It may also be correct to contend that only because the
plaintiff who is a Muslim lady, did not examine herself
and got examined on her behalf, her husband, the same
by itself would not lead to a conclusion that she was not
ready and willing to perform her part of contract. If the
plaintiff has failed to establish that she had all along
been ready and willing to perform her part of contract,
in our opinion, it would not be necessary to enter into
the question as to whether Defendants 5 and 6 were
bona fide subsequent purchasers for value without
notice or not.
In my opinion, the argument raised on behalf of the
respondent/plaintiff by reference to para 31 of the judgment in
the case of Azhar Sultana (supra) is misconceived inasmuch
as the observations in para 31 have to be read in the light of
the arguments which were urged on behalf of the buyer in the
said case and which are contained in para 19(2) of the said
judgment and which reads as under:-
19(1) xxxx xxxx xxxx (19)2 For the purpose
of establishing the plea of readiness and
willingness on the part of the vendee, it was not
necessary to prove that she had enough liquid
cash in her hand inasmuch as for the said
purpose it would be sufficient to show that she
could arrange such an amount for payment of
consideration at the appropriate stage. xxxx xxxx
xxxx xxxx
(underlining is added)
Therefore, it is clear that what was argued on behalf of
the buyer in that case was that there may not be required
liquid cash and it was enough if the buyer could arrange for
the payment of the balance sale consideration i.e. the buyer
did have a financial capacity. It is in this context that the
observations were made by the Supreme Court in para 31 that
the entire amount of consideration need not be kept ready i.e.
the entire amount of balance consideration need not be kept
ready in cash/liquid form and it is enough if the proposed
buyer has a capacity to arrange for payment of the balance
consideration.
I therefore reject the argument that it is the law that a
buyer in a suit for specific performance need not prove his
financial capacity to pay the balance sale consideration.
11. Besides the fact that respondent/plaintiff was guilty of
breach of contract and was not ready and willing to perform
his part of the contract lacking in financial capacity to pay the
balance consideration, in my opinion, the facts of the present
case also disentitle the respondent/plaintiff to the
discretionary relief of specific performance. There are two
reasons for declining the discretionary relief of specific
performance. The first reason is that the Supreme Court has
now on repeated occasions held that unless substantial
consideration is paid out of the total amount of consideration,
the Courts would lean against granting the specific
performance inasmuch as by the loss of time, the balance sale
consideration which is granted at a much later date, is not
sufficient to enable the proposed seller to buy an equivalent
property which could have been bought from the balance sale
consideration if the same was paid on the due date. In the
present case, out of the total sale consideration of ` 5,60,000/-
, only a sum of ` 1 lakh has been paid i.e. the sale
consideration which is paid is only around 17% or so. In my
opinion, by mere payment of 17% of the sale consideration, it
cannot be said that the respondent/plaintiff has made out a
case for grant of discretionary relief of specific performance.
The second reason for the respondent/plaintiff not being
entitled to specific performance is that in the only legal notice
dated 18.12.2007, Ex.PW1/2 issued on behalf of the
respondent/plaintiff, there was no claim seeking specific
performance, but the respondent/plaintiff only sought return
of double the amount of earnest money alongwith interest.
Obviously, the respondent/plaintiff himself, and who is a
property dealer, only wanted double the amount of earnest
money paid and not specific performance of the contract. As
already stated, the respondent/plaintiff had failed to prove his
financial capacity and when we take this fact with averment of
only seeking return of money and not specific performance, in
my opinion, the respondent/plaintiff cannot be held entitled to
specific performance. This aspect also has to be considered
with the issue of readiness and willingness inasmuch as
readiness and willingness has to be continuous for seeking
specific performance and once the respondent/plaintiff by
issuing his legal notice dated 18.12.2007, Ex.PW1/2 only
asked for payment of double the amount of earnest money and
not specific performance, it cannot be said that
respondent/plaintiff at all times was and always continued to
be ready and willing for specific performance.‖
(ii) J.P. Builders and Anr. Vs. A. Ramadas Rao and Anr.
(2011) 1 SCC 429 wherein it was held as under:
"Readiness and Willingness
20. Section 16 of the Specific Relief Act, 1963 provides
for personal bars to relief. This provision states that:
―16. Personal bars to relief - Specific
performance of a contract cannot be enforced in favour
of a person,
a) who would not be entitled to recover compensation
for its breach; or
b) who has become incapable of performing, or violates
any essential term of, the contract that on his part
remains to be performed, or acts in fraud of the
contract, or wilfully acts at variance with, or in
subversion of, the relation intended to be established by
the contract; or
c) who fails to aver and prove that he has performed or
has always been ready and willing to perform the
essential terms of the contract which are to be
performed by him, other than terms the performance of
which has been prevented or waived by the defendant.
Explanation.- For the purposes of Clause (c),-
(i) where a contract involves the payment of
money, it is not essential for the plaintiff to
actually tender to the defendant or to deposit in
court any money except when so directed by the
court;
(ii) the plaintiff must aver performance of, or
readiness and willingness to perform, the
contract according to its true construction.
21. Among the three Sub-sections, we are more
concerned about Sub-section(c). "Readiness and
willingness" is enshrined in Clause (c) which was not
present in the old Act of 1877. However, it was later
inserted with the recommendations of the 9th Law
Commission's report. This clause provides that the
person seeking specific performance must prove that he
has performed or has been ready and willing to
perform the essential terms of the contract which are to
be performed by him.
22.. The words "ready" and "willing" imply that the
person was prepared to carry out the terms of the
contact. The distinction between "readiness" and
"willingness" is that the former refers to financial
capacity and the latter to the conduct of the plaintiff
wanting performance. Generally, readiness is backed
by willingness.
23.. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao
and Ors. : (1995) 5 SCC 115 at para 5, this Court held:
...Section 16(c) of the Act envisages that plaintiff must
plead and prove that he had performed or has always
been ready and willing to perform the essential terms of
the contract which are to be performed by him, other
than those terms the performance of which has been
prevented or waived by the defendant. The continuous
readiness and willingness on the part of the plaintiff is
a condition precedent to grant the relief of specific
performance. This circumstance is material and
relevant and is required to be considered by the court
while granting or refusing to grant the relief. If the
plaintiff fails to either aver or prove the same, he must
fail. To adjudge whether the plaintiff is ready and
willing to perform his part of the contract, the court
must take into consideration the conduct of the plaintiff
prior and subsequent to the filing of the suit alongwith
other attending circumstances. The amount of
consideration which he has to pay to the defendant
must of necessity be proved to be available. Right from
the date of the execution till date of the decree he must
prove that he is ready and has always been willing to
perform his part of the contract. As stated, the factum of
his readiness and willingness to perform his 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 always ready and willing to perform his
part of the contract.
24. In P. D'Souza v. Shondrilo Naidu : (2004) 6 SCC
649 paras 19 and 21, this Court observed:
19. It is indisputable that in a suit for specific
performance of contract the plaintiff must
establish his readiness and willingness to
perform his part of contract. The question as to
whether the onus was discharged by the plaintiff
or not will depend upon the facts and
circumstance of each case. No strait-jacket
formula can be laid down in this behalf....
21........The readiness and willingness on the
part of the plaintiff to perform his part of
contract would also depend upon the question as
to whether the defendant did everything which
was required of him to be done in terms of the
agreement for sale.
25. Section 16(c) of the Specific Relief Act, 1963
mandates "readiness and willingness" on the part of the
plaintiff and it is a condition precedent for obtaining
relief of grant of specific performance. It is also clear
that in a suit for specific performance, the plaintiff must
allege and prove a continuous "readiness and
willingness" to perform the contract on his part from
the date of the contract. The onus is on the plaintiff.
26.It has been rightly considered by this Court in R.C.
Chandiok and Anr. v. Chuni Lal Sabharwal and Ors. :
(1970) 3 SCC 140 that "readiness and willingness"
cannot be treated as a straight jacket formula. This has
to be determined from the entirety of the facts and
circumstances relevant to the intention and conduct of
the party concerned.
27. It is settled law that even in the absence of
specific plea by the opposite party, it is the mandate of
the statute that plaintiff has to comply with Section
16(c) of the Specific Relief Act and when there is non-
compliance with this statutory mandate, the Court is
not bound to grant specific performance and is left with
no other alternative but to dismiss the suit. It is also
clear that readiness to perform must be established
throughout the relevant points of time. "Readiness and
willingness" to perform the part of the contract has to
be determined/ascertained from the conduct of the
parties.‖
(iii) Jinesh Kumar Jain vs. Iris Paintal & Ors. ILR (2012) V
Delhi 678 to contend that merely stating that the plaintiff is ready and
willing to perform his part of the contract is not sufficient, and the same is
to be proved by clear cut evidence such as Income Tax Returns, statement
of bank accounts and details of his assets in any form to show his financial
capacity to pay the balance consideration.
36. He further submits that the Courts have held that till such time
substantial amount of the sale consideration or contract amount have been
paid, the Courts would restrain themselves from granting specific
performance. In the present case, it is stated that the plaintiff has paid only
an amount of Rs.1.00 crore. In the aforesaid judgment, the Court had relied
upon the Supreme Court dicta in Saradamani Kandappan vs. Mrs. S.
Rajalakshmi, 2011 (12) SCC 18 which held as under:
―15. The Supreme Court in the recent judgment
of Saradamani Kandappan vs. Mrs. S. Rajalakshmi,
2011 (12) SCC 18 has had an occasion to consider the
aspect of payment of a nominal advance price by the
plaintiff and its effect on the discretion of the Court in
granting the discretionary relief of specific
performance. Though in the facts of the case before the
Supreme Court, it was the buyer who was found guilty
of breach of contract, however, in my opinion, the
observations of the Supreme Court in the said case are
relevant not only because I have found in this case the
plaintiff/ buyer guilty of breach of contract, but also
because even assuming the plaintiff/buyer is not guilty
of breach of contract, yet, Section 20 sub-Section 3 of
the Specific Relief Act, 1963 as reproduced above
clearly requires substantial acts on behalf of the
plaintiff/proposed purchaser i.e. payment of substantial
consideration. Paras 37 and 43 of the judgment in the
case of Saradamani Kandappan (supra) are relevant
and they read as under:
37. The reality arising from this economic
change cannot continue to be ignored in deciding
cases relating to specific performance. The steep
increase in prices is a circumstance which makes
it inequitable to grant the relief of specific
performance where the purchaser does not take
steps to complete the sale within the agreed
period, and the vendor has not been responsible
for any delay or non-performance. A purchaser
can no longer take shelter under the principle
that time is not of essence in performance of
contracts relating to immovable property, to
cover his delays, laches, breaches and "non-
readiness". The precedents from an era, when
high inflation was unknown, holding that time is
not of the essence of the contract in regard to
immovable properties, may no longer apply, not
because the principle laid down therein is
unsound or erroneous, but the circumstances that
existed when the said principle was evolved, no
longer exist. In these days of galloping increases
in prices of immovable properties, to hold that a
vendor who took an earnest money of say about
10% of the sale price and agreed for three
months or four months as the period for
performance, did not intend that time should be
the essence, will be a cruel joke on him, and will
result in injustice. Adding to the misery is the
delay in disposal of cases relating to specific
performance, as suits and appeals therefrom
routinely take two to three decades to attain
finality. As a result, an owner agreeing to sell a
property for rupees one lakh and received rupees
ten thousand as advance may be required to
execute a sale deed a quarter century later by
receiving the remaining rupees ninety thousand,
when the property value has risen to a crore of
rupees.
xxx xxx xxx
43. Till the issue is considered in an appropriate
case, we can only reiterate what has been
suggested in K.S. Vidyanandam.
(i) The courts, while exercising discretion in suits
for specific performance, should bear in mind
that when the parties prescribe a time/period, for
taking certain steps or for completion of the
transaction, that must have some significance
and therefore time/period prescribed cannot be
ignored.
(ii) The courts will apply greater scrutiny and
strictness when considering whether the
purchaser was "ready and willing" to perform his
part of the contract.
(iii) Every suit for specific performance need not
be decreed merely because it is filed within the
period of limitation by ignoring the time-limits
stipulated in the agreement. The courts will also
"frown" upon suits which are not filed
immediately after the breach/refusal. The fact
that limitation is three years does not mean that a
purchaser can wait for 1 or 2 years to file a suit
and obtain specific performance. The three-year
period is intended to assist the purchasers in
special cases, as for example, where the major
part of the consideration has been paid to the
vendor and possession has been delivered in
part-performance, where equity shifts in favour
of the purchaser.
(emphasis is mine)"
37. Finally, he relies upon the case of Umabai and Another v. Nilkanth
Dhondiba Chavan (dead) by Lrs. & Another (2005) 6 SCC 243 which
held as under:
―30. It is now well settled that the conduct of the parties,
with a view to arrive at a finding as to whether the plaintiff-
respondents were all along and still are ready and willing to
perform their part of contract as it mandatorily required under
Section 16 (c) of the Specific Relief Act must be determined
having regard to the entire attending circumstances. A bare
averment in the plaint or a statement made in the examination-
in-chief would not suffice. The conduct of the plaintiff-
respondents must be judged having regard to the entirety of the
pleadings as also the evidences brought on records.‖
31. In terms of Forms 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‖. The
offer of the plaintiff in the instant case is a conditional one and,
thus, does not fulfil the requirements of law.
32. In Bank of India7, it was held (AIR p. 96, para 21):
―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.‖
38. Mr. Vaidyanathan, the learned Senior Advocate for the plaintiff,
submits that facts of the present case are clearly distinguishable from the
ones relied upon by Mr. Sethi since the plaintiff had approached this Court
even before the expiry of the contract period and had pleaded his readiness
and willingness to perform his part of the contract; that in the aforesaid
case of His Holiness Acharya Swami Ganesh Dassji, the petitioner had
delayed execution of the Sale Deed on one pretext or the other. The letter
written by the respondent too indicates that the respondent was willing to
execute the sale deed. He submits that in the present case, the position is
just reversed and the factum of readiness and willingness of the parties has
to be adjudged keeping in mind the circumstances of the case.
39. Mr. Sethi then relies upon the ratio of N.P. Thirugnanam (Dead)
by LRs vs. Dr. R. Jagan Mohan Rao and Others (1995) 5 SCC 115
which held:
―5. It is settled law that remedy for
specific performance is an equitable remedy and
is in the discretion of the court, which discretion
requires to be exercised according to settled
principles of law and not arbitrarily as
adumbrated under Section 20 of the Specific
Relief Act 1963 (for short, 'the Act'). Under
Section 20, the court is not bound to grant the
relief just because there was valid agreement of
sale. Section 16(c) of the Act envisages that
plaintiff must plead and prove that he had
performed or has always been ready and willing
to perform the essential terms of the contract
which are to be performed by him, other than
those terms the performance of which has been
prevented or waived by the defendant. The
continuous readiness and willingness on the part
of the plaintiff is a condition precedent to grant
the relief of specific performance. This
circumstance is material and relevant and is
required to be considered by the court while
granting or refusing to grant the relief. If the
plaintiff fails to either aver or prove the same, he
must fail. To adjudge whether the plaintiff is
ready and willing to perform his part of the
contract, the court must take into consideration
the conduct of the plaintiff prior and subsequent
to the filing of the suit alongwith other attending
circumstances. The amount of consideration
which he has to pay to the defendant must of
necessity be proved to be available. Right from
the date of the execution till date of the decree he
must prove that he is ready and has always been
willing to perform his part of the contract. As
stated, the factum of his readiness and
willingness to perform his 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 always ready and
willing to perform his part of the contract.‖
40. Mr. Vaidyanathan, the learned Senior Advocate for the plaintiff,
submits that this case too is distinguishable from the facts of the present
case because the plaintiff had failed to discharge his part of the contract as
he had neither deposited the amount of Rs.2.00 lacs as directed by the
Court nor had given the Bank Guarantee and was instead dabbling in real
estate business. Furthermore, it is the plaintiff‟s case that it is ready and
willing to perform its part of the contract and the same has neither been
questioned in the Written Statement nor was the said averment in doubt
during the cross-examination of the plaintiff.
41. On the issue of evidential value of the handwriting experts, Mr.
Sethi relies upon Smt. Bhagwan Kaur Vs. Shri Maharaj Krishan Sharma
and Ors. (1973) 4 SCC 46 which held that:
―The evidence of a handwriting expert,
unlike that of a fingerprint expert, is generally of
a frail character and its fallibilities have been
quite often noticed. The courts should, there tore,
be wary to give too much weight to the evidence
of handwriting expert. In Sri Sri Kishore
Chandra Singh Deo v. Babu Ganesh Prasad
Bhagat and Ors. : [1954]1SCR919 , this Court
observed that conclusions based upon mere
comparison of handwriting must at best be
indecisive and yield to the positive evidence in
the case..‖
42. Mr. Vaidyanathan distinguishes the present case from each case
relied upon by Mr. Sethi. He submits that the plaintiff at various times had
offered to pay up the monies due under the Agreement; that there was no
power given to either party to willingly revoke the contract. Therefore, the
defendant‟s act of cancelling and revoking the Agreement by way of the
letters dated 09.09.2005, 01.10.2005 and 14.12.2005 is meaningless and
non est. Furthermore, the defendant had no right to forfeit the said monies.
He contends that the plaintiff is not in default; that on the first day when
the plaintiff moved the Court, the Agreement was actually in existence;
that the entire amount had to be paid on or before 20.01.2006 subject to the
defendant providing the NOC, IT clearance under Section 281 of the
Income Tax Act, 1961 and all other permissions required from the
concerned authorities to complete the sale of the said property in favour of
the plaintiff on or before 31.12.2005 and simultaneous upon the payment
being made, the defendant was to execute and register the Sale Deed in
favour of the plaintiff and hand over the physical, vacant and peaceful
possession of the suit property to the plaintiff along with all the original
title deeds. The case was first listed on 12.01.2006 when the Court had
passed the following order:
―I.A. No. 351/2006
Issue notice, returnable on
06.02.2006.
This is a suit for specific
performance of an agreement to sell dated 16.09.2005
whereby the suit property was allegedly agreed to be
sold by the defendant to the plaintiff. A sum of Rs.2.5
crores was to be paid at the time of entering into the
agreement. The said amount was paid in two parts,
one is by a cheque of Rs.1 crore and Rs.1.5 crores in
cash. The learned counsel for the plaintiff has referred
to the agreement in original which is filed at page 114
of the documents file and he has also filed a receipt at
page No. 120 of the documents file to indicate that
both the cash amount as well as the cheque had been
received by the defendant and insofar as the plaintiff is
concerned all that was required to be done by it had
been done. On the other hand, the defendant was to
get a no objection certificate as indicated in clause No.
3 of the agreement by 31.12.2005 which the defendant
has allegedly failed and neglected to get. The learned
counsel for the plaintiff further pointed out that the
balance amount of Rs.14.49 crores was to be paid by
the plaintiff by 20.01.2006 which it is ready and
willing to do provided the defendant gets the requisite
no objection certification. It is in these circumstances
that the plaintiff has filed this application seeking ex
parte ad interim directions restraining the defendant,
its agents, representatives, employees from in any
manner selling, transferring, assigning, disposing of,
alienating or parting with possession of the property
admeasuring 16 Bighas and 13 Biswas bearing
Mustakil No. 1 and 8, Killa No. 17/2 (2-04), 18/2/1 (1-
08), 24 (4-16), 3/3 (2-08), 4 (3-08) with boundary wall,
structure of farm house, situated at Village Bijwasan,
Tehsil Mehrauli, Vasant Vihar, District South West
Delhi in favour of anyone except the plaintiff in terms
of the agreement dated 16.09.2005.
After considering all the
circumstances, I am of the opinion that the plaintiff is
entitled to ex parte orders. Directions as prayed for
and mentioned above are granted till the next date of
hearing.‖
43. It was reiterated on behalf of the plaintiff that it was willing to pay
the entire sale consideration to the defendant subject to the defendant
handing over the possession of the property to the plaintiff. The defendant
sought time in this regard but on 12.03.2009, the learned counsel for the
defendant stated that she had no instructions with regard to the offer given
by the learned Senior Advocate for the plaintiff on 13.08.2008. In the
circumstances, the ex parte order of 12.01.2006 was made absolute.
44. Furthermore, in reply to the defendant‟s letter of 14.12.2005, the
plaintiff vide its letter of 16.12.2005 had stated that they were always ready
and willing to pay the requisite amount even before 31.12.2005. In
particular, this letter stated:
―We are shocked to learn that you are only admitting the
receipt of Rs.1,50,00,000/- (Rupees One crore only) which
was given to you by cheque. The said denial is totally
malafide and dishonest. You had issued a Receipt-cum-
Acknowledgment of not only the cheque, but for cash as well
which was a collective receipt and therefore the denial of non
receipt of cheque is absolutely wrong and hence denied. Even
while issuing you the cheque, we got your signatures on the
photocopy of the said cheque which we are still holding with
us, therefore, you cannot deny that you have not received the
said cheque. If you have not encashed the said cheque till
today that clearly reveals your dishonest intention, but no
fault can be attributed to us as so far as we are concerned, we
have already paid you the amount in the mode in which it was
agreed.
We, therefore, request you to present the cheque of Rs.1
crore to the b ank for immediate encashment and do not with
hold the same with yourself. However, if you have mis-placed
the said cheque, please let us know, we will issue another
cheque in lieu thereof but you cannot accuse us that we have
not given you the said cheque of Rs.1 crore.
Please note we have always been ready and willing and
are still ready and willing to complete the deal and money is
completely lying ready with us and we are in a position to get
the sale completed even before 31st December, 2005 and are
only awaiting an NOC from ADM(LA) and income tax
clearance under Section 281.
We deny your allegation that you have ever written to
us any letter much less the letter dated 9th September, 2005
and 1st October, 2005 wherein you have mentioned to us that
a sum of Rs.1 crore had not been paid to you. The said
allegation is absolutely false, wrong and hence denied as
factually and actually we have never received any such
letters. We further deny your allegation that you have any
right to terminate the said agreement. In this regard it is
stated that since we have fulfilled all of our obligations as
contained in the said agreement, therefore you have no right
whatsoever to terminate the said agreement. Even otherwise,
there is no authority vested in law with you to terminate the
said agreement. You cannot be allowed to take advantages of
your own wrongs.
Please note the agreement dated 6th September, 2005,
though written as 16th September, 2005 is still valid,
subsisting and binding upon the parties and you have no right
to escape from the obligations contained in the said
agreement.
We therefore, request you to kindly withdraw the letter
dated 14th December, 2005 and please confirm to us as to
when you are sending us the NOC from the ADM(LA) and
income tax clearance under Section 281 and fix the date for
execution of sale deed so as to enable us to take the stamp
papers and prepare pay orders in your favour well within
time.‖
45. In his statement in affidavit, PW-1 had averred to the availability of
funds. This was never questioned and nothing has been placed on record
by the defendant to show that the plaintiff did not have monies available
with it. The learned Senior Advocate submits that the plaintiff had come
to Court before the due date of the payment and had offered to pay the
entire amount even in default of the requisite clearance in terms of NOC
and Income Tax returns to be furnished by the defendant. This, accoring to
him, shows the plaintiff‟s bona fides. Furthermore, the plaintiff had stated
in the letter of 16.12.2005 that in case the cheque of Rs. 1 crore issued by it
had for some reason been misplaced by the defendant, it would be ready to
issue a fresh cheque of the same amount to the defendant.
46. Finally, Mr. Vaidyanathan argues that the defendant never offered to
return the amount of Rs. 1.50 crore, which was appropriated by it without
having any such power to do so. He refers to para 10 of the Written
Statement in which there is no specific mention of the readiness and
willingness on part of the defendant to refund the amount.
He then relies upon the following judgments:
(i) The Bank of India Ltd. & Ors. Vs. Jamsetji A. H. Chinoy
and M/s. Chinoy and Co., : AIR 1950 PC 90
(ii) 83 (2000) DLT 615
(iii) 2004 (8) SCC 689 para 13
(iv) AIR (2014) SC 1582
47. This Court is of the view that from the records of the case what
emerges is that the plaintiff had all along set up a case that it was ready and
willing to perform his part of the contract. It had paid Rs. 2.50 crore at the
time of signing of the Agreement. In his affidavit, PW-1 Mr. Pankaj Nakra
has deposed to the ready availability of funds to pay off the defendant.
This availability of funds was neither questioned by the defendants nor was
nothing brought on record to show that the plaintiffs did not have ready
monies available with them. The plaintiffs have come to the Court before
the expiry of date of payment and have offered to pay the entire amount
even in default of the requisite clearance in terms of NOC from the
administration and Income Tax Returns to be filed by the defendants.
48. In this suit for Specific Performance, what emerges is that as per the
Agreement dated 16.09.2005, an amount of Rs. 14.99 crores was to be paid
by 20.01.2006. By way of Ex. PW1/6, i.e., the letter of 24th November,
2005, an offer was made by the plaintiff to make the remaining payment
subject to the defendant furnishing an NOC from the concerned authorities.
This letter was sent by Registered A.D. post to the defendant at its 1,
Curzon Road, New Delhi - 110 001 address. Reply to the same was sent
vide letter dated 14.12.2005 from the defendant‟s address at A.R.A.
Centre, E-2, Jhandewala Extension, New Delhi - 110 055 to which the
plaintiff replied vide letter dated 16.12.2005 (Ex. PW1/9) stating that it
was surprised to know that the defendant was admitting receipt of only Rs.
1.50 crore by cash, especially since the defendant‟s had issued a receipt-
cum-acknowledgement of not only the cash, but also for the cheque of Rs.
1 crore. This was a collective receipt and therefore, the denial of receipt of
the cheque is not accepted by the Court. The plaintiff requested the
defendant to present the cheque of Rs. 1 crore to the bank for immediate
encashment and furthermore, offered to issue a fresh cheque in the event
that the original cheque had been misplaced. The plaintiff has also denied
receipt of any letters dated 09.09.2005 and 01.10.2005 wherein the
defendant had mentioned that the sum of Rs. 1 crore had not been paid to
it.
49. The Court would note that the said two letters were apparently
written by the defendant from its Jhandewalan Extension address and that
too through a UPC and not under a registered AD or Speed Post. It is
rather odd that a company which was supposed to receive a cheque for an
amount of Rs. 1 crore would take the matter so lightly as to intimate the
purchaser/plaintiff that it had not received the cheque. Therefore, the
defendant‟s contention that the cheque was never received by it would be
an untenable argument. The Court would seriously doubt and hold
unreliable the endeavour of the defendant to address a letter on a plain
paper and not on the company‟s letter head to the plaintiff at its
Jhandewala Extension, New Delhi - 110 055 address. The defendants had
no intimation or reason to send the said letter at the Jhandewala Extension
address instead of the Connaught Place address while its office is based at
1, Curzon Road, New Delhi - 110 001. In a metropolis like Delhi, property
prices have shot through the sky over the years and continue to rise
spontaneously. It is possible that the defendant started to have second
thoughts about the sale consideration and did not present the cheque for
encashment.
50. The signatures of Mr. Satinder Singh Chhabra, Director of the
defendant M/s. Shringar Hotels (P) Ltd. as an authorised signatory on each
page of the Agreement to Sell dated 16.09.2005 are the admitted signatures
of Mr. Satinder Singh Chhabra and have been marked as A1 to A9. The
disputed signatures of Mr. Satinder Singh Chhabra have been marked Q-1
on the Revenue Stamp, Q-2 on the Receipt/acknowledgement adjoining the
Revenue Stamp, Q-3 and Q-4 on the body cuttings of the writing of the
receipt/acknowledgment of money. The disputed signature of Mr. Satinder
Singh is marked Q-5 on the photocopy of the cheque as a token of having
received the cheque No.481501 dated 6.9.2005 drawn on SBI Bank and
one disputed signature of Mr. Satinder Singh on the Resolution of the
company dated 2.9.2005 is marked as Q-6. According to the handwriting
experts, the superficial differences in the disputed signatures Q-3, Q-5 and
Q-6 can be attributed to the natural variations that are bound to occur in
one‟s signature at different points of time.
51. From the aforesaid, it is clearly the signature of the Director of the
defendant-company Mr. Satinder Singh Chhabra, as has been established
by the hand writing expert, which has been appended on both the
Agreement to Sell dated 16.09.2005 as well as on the
receipt/acknowledgement of the payment of Rs.2.5 crore, i.e., Rs. 1 crore
through cheque and Rs. 1.50 crore through cash. The Court is of the view
that the defendant‟s defence is moonshine and an endeavour to resile from
the contract.
52. The Court would note that the plaintiff has proved its bona fides to
the defendant through the letters dated 24.11.2005 and 16.12.2005, which
stated that it was ready and willing to pay the remaining monies, provided
the defendant carries out its part of the contract. The plaintiff has duly
published a public notice in the Hindustan Times, New Delhi edition on
21.12.2005 (Mark-A) intimating the public at large that it had agreed to
purchase the suit property from the defendants for which substantial
amounts have already been paid against written receipts and the balance
amount is liable to be paid on or before 20.01.2006.
53. Furthermore, the plaintiff filed this suit on 09.01.2006 for which the
Court fee stamp papers for a sum of Rs.16,99,00,000/- were obtained on
07.01.2006. The suit was listed for the first time before the Court on
12.01.2006, on which date, an ex parte injunction order was granted in
terms of the prayers in I.A. 351/2006. The Court was satisfied that the
plaintiffs had made out a prima facie case for the grant of an ex parte
injunction. That position has not been altered till date. From the
aforesaid, it is evident that the plaintiff has established it bona fides and
had, even on that day, shown to the Court that it was ready and willing to
perform its part of the Agreement.
54. The suit was filed 11 days prior to the expiry of the period for
payment of the balance sale consideration to the defendant. The Court did
not deem it necessary to direct the plaintiff to deposit the balance amount
in the Court. The availability of funds was never questioned at an earlier
stage. The plaintiff approached the Court even before the date of
execution of the Agreement. Therefore the plaintiff is not in default.
Indeed, even two years after filing of the suit, an offer was made for
payment of the entire amount on 13.08.2008.
55. In view of the above, the Court is of the view that the plaintiffs have
made out a case for grant of reliefs sought in the plaint. Accordingly, the
suit is decreed in terms of the prayers (i) and (ii).
56. The plaintiff is also awarded a cost of Rs.2.00 lacs.
57. Decree sheet be drawn up accordingly.
58. The suit is disposed off in the above terms.
NAJMI WAZIRI, J
DECEMBER 22, 2015/acm/b'nesh/ak/nrk
