Karnataka High Court
Smt Susheela M Parekh vs Sri M S Manoharan on 1 February, 2021
Author: S.Sujatha And Magadum
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
®
DATED THIS THE 01st DAY OF FEBRUARY, 2021
PRESENT
THE HON'BLE MRS. JUSTICE S.SUJATHA
AND
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
RFA.NO.278 OF 2012 (SP)
BETWEEN:
SMT. SUSHEELA M. PAREKH
W/O SRI. MAHESH CHANDRA PAREKH
AGED 65 YEARS
R/AT NO.20/1, 5TH MAIN ROAD
GANDHINAGAR
BANGALORE-560 009. ....APPELLANT
(BY SRI. GOPAL SINGH, ADVOCATE)
AND:
SRI M. S. MANOHARAN
S/O SRI. SUBBURAMAN
AGED 55 YEARS
R/AT MUTHIYALPET
KANCHEEPURAM TALUK & DISTRICT
TAMIL NADU - 631 601. ....RESPONDENT
(BY SRI. B.N. ANANTHA NARAYANA, ADVOCATE FOR C/R)
2
THIS RFA IS FILED UNDER SECTION 96 R/W ORDER 41 RULE
1 OF CPC AGAINST THE JUDGMENT AND DECREE DATED:
06.01.2012 PASSED IN O.S.NO.814/2007 ON THE FILE OF THE XI
ADDL. CITY CIVIL JUDGE, BANGALORE, DECREEING THE SUIT FOR
SPECIFIC PERFORMANCE.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 10.11.2020, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, SACHIN SHANKAR MAGADUM J.,
DELIVERED THE FOLLOWING:
JUDGMENT
The captioned appeal is filed by the defendant
questioning the judgment and decree passed by the Court of
first instance in O.S.No.814/2007, wherein the suit of the
respondent/plaintiff is decreed directing the present
appellant/defendant to execute registered sale deed in respect
of the suit schedule property.
2. The facts leading to the case are as under:
The respondent/plaintiff is a businessman dealing with
Silk Sarees and other allied fabrics both as a wholesale as well
as a retail dealer. The respondent/plaintiff has showrooms in
Bengaluru City, one at Chennai and one at Kanchipuram. The
average turnover of respondent/plaintiff is about
Rs.10,00,000/- per day. The respondent/plaintiff is having
wholesale and retail showrooms at Arcot Srinivasachar street,
Bengaluru. The adjacent building bearing No.58, New Nos.14
and 15 is the subject matter of the suit and the same is owned
by the appellant/defendant. The suit schedule property
consists of basement, ground, first and second floors. The
respondent/plaintiff and the appellant/defendant are known to
each other and their relationship is very cordial. The
appellant/defendant's son namely, Sunil approached the
respondent/plaintiff and offered to sell the suit schedule
property and accordingly, sale price was fixed at
Rs.1,98,00,000/-. As a token advance, the
respondent/plaintiff paid a sum of Rs.2,00,000/-. On
24.04.2006, the appellant/defendant executed an agreement
and in the said agreement, the stipulated time to get the sale
deed executed was fixed at three months. The
respondent/plaintiff in fact wanted the sale deed to be
executed but, however, the appellant/defendant insisted that
she needs three months time. At the time of executing the
agreement, the appellant/defendant further insisted that three
months time is not enough and insisted for five months period.
The appellant/defendant insisted for five months since a large
quantity of stock was yet to be disposed off and the same
would be cleared only during reopening of schools. The
respondent/plaintiff in terms of the agreement paid further
advance amount of Rs.8,01,000/- by issuing a cheque drawn
on Bank of UTI. The respondent/plaintiff, in all, paid
Rs.10,01,000/- and it was agreed that sale transaction would
be completed within a period of five months.
The respondent/plaintiff though was ready to pay the
balance sale consideration, the appellant/defendant went on
postponing the same. It was stated by appellant/defendant
that her son is finding it difficult to exhaust the sale of stock
and therefore, she kept on requesting to grant further time.
The respondent/plaintiff having regard to the relationship
accepted for extension of time. It was only on 08.11.2006,
the respondent/plaintiff was compelled to write a letter to the
appellant/defendant calling upon the appellant/defendant to
execute sale deed by receiving the balance sale consideration.
The appellant/defendant issued a legal notice on 15.11.2006
intimating the termination of agreement of sale. The
respondent/plaintiff issued a reply to this notice. Inspite of
legal notice/letter, the appellant/defendant did not come
forward to perform her part of contract and as such, the
respondent/plaintiff was compelled to file the suit for specific
performance of contract in O.S.No.814/2007.
The appellant/defendant, on receipt of summons,
contested the proceedings by filing the written statement. The
appellant/defendant stoutly denied the entire averments made
in the plaint. The appellant/defendant specifically contended
that time is the essence of contract. The appellant/defendant
specifically contended in the written statement that
respondent/plaintiff was not ready and willing to complete the
sale transaction within the stipulated period of five months.
The appellant/defendant also specifically contended that as
per clause (6) of the agreement, in the event, the
respondent/plaintiff fails to perform his part of contract within
two months, he would not be even entitled to seek refund of
the advance paid by him. The appellant/defendant also
specifically contended that notice of cancellation of sale
agreement to the respondent/plaintiff was sent on
15.11.2006. The appellant/defendant also specifically
contended that the time stipulated in agreement, at the first
instance, was changed at the instance of the
respondent/plaintiff. The appellant/defendant specifically
contended that she never requested for any extension of time
nor she expressed her helplessness in performing her part of
contract. The allegations in the plaint insofar as the
appellant/defendant seeking extension of time was specifically
denied and seriously disputed by the appellant/defendant. At
para 14 of the written statement, the appellant/defendant
specifically contended that the respondent/plaintiff was not
ready and willing to complete the sale transaction within the
stipulated time. It is also specifically stated in the written
statement that on account of failure on the part of the
respondent/plaintiff in paying the balance sale consideration,
the appellant/defendant has made alternate financial
arrangement and on these set of facts, the
appellant/defendant prayed for dismissal of the suit.
On the basis of the above pleadings, the Trial Court
formulated the following issues:
"1. ¢: 24.4.2006 gÀ PÀæAiÀÄzÀ PÀgÁgÀÄ ¥ÀvÀæzÀ C£ÀéAiÀÄ vÀ£Àß ¥Á°£À
J®è PÀvÀðªÀåUÀ¼À£ÀÄß ¤ªÀð»¸À®Ä ªÁ¢ ¸ÀzÁ Eaѹ vÀAiÀiÁgÁVzÀÝgÀÄ JA§ÄzÀ£ÀÄß
ªÁ¢AiÀÄÄ ¸Á©ÃvÀÄ ¥Àr¸ÀĪÀgÉÃ?
2. ¢: 21.09.2006PÉÌ ¢: 24.4.2006 gÀ PÀæAiÀÄzÀ PÀgÁgÀÄ ¥ÀvÀæªÀÅ
ªÁ¢AiÀÄ ¤®ðPÀëvÀ£À¢AzÀ CAvÀåUÉÆArzÉ JA§ÄzÀ£ÀÄß ¥ÀæwªÁ¢AiÀÄÄ ¸Á©ÃvÀÄ
¥Àr¸ÀĪÀgÉÃ?
3. ¢: 24.4.2006 gÀ PÀæAiÀÄzÀ PÀgÁgÀÄ ¥ÀvÀæªÀ£ÀÄß £ÁåAiÀÄ ¸ÀªÀÄävÀªÁV
gÀzÀÄÝUÉƽ¸À¯ÁVzÉ JA§ÄzÀ£ÀÄß ¥ÀæwªÁ¢¸Á©ÃvÀÄ ¥Àr¸ÀĪÀgÉÃ?
4. ¢:24.4.2006 gÀ PÀæAiÀÄzÀ PÀgÁgÀÄ ¥ÀvÀæzÀ C£ÀéAiÀÄ ¥ÀæwªÁ¢AiÀÄ
«gÀÄzÀÞ ¤¢ðµÀÖ PÀvÀðªÀå ¥Á®£ÉAiÀÄ ¥ÀjºÁgÀªÀ£ÀÄß ¥ÀqÉAiÀÄ®Ä ªÁ¢AiÀÄÄ CºÀðgÉÃ?
5. rQæ CxÀªÁ DzÉñÀªÉãÀÄ?"
The respondent/plaintiff in support of his contention
examined himself as PW.1 and in support of ocular evidence
produced documentary evidence vide Exs.P-1 to P-8. The
appellant/defendant in support of her contention examined
herself as DW.1 and examined her son as DW.2 and by way of
rebuttal evidence relied on documentary evidence vide Exs.D-
1 to D-12.
The Trial Court after appreciation of oral and
documentary evidence, answered issue No.1 in the affirmative
by holding that respondent/plaintiff was ever ready and willing
to perform his part of contract. The Trial Court answered
issue Nos.2 and 3 in the negative by holding that
appellant/defendant has failed to establish that on account of
breach on the part of the respondent/plaintiff, the agreement
of sale executed on 24.04.2006 is cancelled. The Trial Court
has further answered issue No.4 in the affirmative holding that
respondent/plaintiff is entitled for discretionary relief of
specific performance of contract.
The Trial Court while dealing with issue Nos.1 to 4 has
come to conclusion that the material on record and the recitals
in agreement of sale as per Ex.P-1 does not establish that
time is the essence of contract as alleged by the
appellant/defendant. The Trial Court has further recorded a
finding that appellant/defendant has failed to establish that it
is the respondent/plaintiff who insisted for five months time to
complete the sale transaction. Since there is no rebuttal
evidence lead in by the appellant/defendant, Trial Court was of
the view that time is not the essence of contract.
The Trial Court on readiness and willingness has taken
note of Ex.P-8, which is the IT returns relating to the firm and
the firm has declared its income of Rs.32,58,350/- for the year
2005-06. The Trial Court has also taken judicial note of the
fact that on the earlier occasion, the suit was decreed and as
per the direction of the Court, the respondent/plaintiff has
deposited the balance sale consideration of Rs.1,88,00,000/-.
Relying on these material aspects, the Trial Court was of the
view that the respondent/plaintiff has financial capacity to
mobilize the funds. On these set of reasonings, the Trial Court
has proceeded to hold that respondent/plaintiff has
established his readiness and willingness to perform his part of
contract.
While examining issue No.3, the Trial Court was of the
view that since time is not the essence of contract, the
appellant/defendant could not have cancelled the agreement
of sale as per Ex.P-3. Since time is not essence of contract,
there is no lawful termination of the agreement of sale as
alleged by the appellant/defendant. While answering issue
No.4, the Trial Court held that the respondent/plaintiff has
paid an advance amount of Rs.10,00,000/- and if the
discretionary relief of specific performance is not granted, it is
the respondent/plaintiff who would be put to hardship and
inconvenience. The appellant/defendant has received a sum
of Rs.10,00,000/- and if she is directed to execute the
registered sale deed in terms of the agreement of sale as per
Ex.P-1, no hardship would be caused to the
appellant/defendant. On these set of reasonings, the Trial
Court has answered issue No.4 in the affirmative. The Trial
Court has proceeded to decree the suit granting discretionary
relief of specific performance and has accordingly, directed the
appellant/defendant to execute registered sale deed by
receiving balance sale consideration of Rs.1,88,00,000/-.
Being aggrieved by the judgment and decree, the
appellant/defendant is before this Court.
3. Learned counsel appearing for the
appellant/defendant would vehemently argue and contend
before this Court that the finding of the Court below that time
is not the essence of contract is palpably erroneous, perverse
and contrary to the clinching evidence on record. Learned
counsel appearing for the appellant/defendant would contend
before us that the appellant/defendant was in dire need of
funds and hence, it was specifically contemplated in the
agreement of sale as per Ex.P-1 that the sale transaction has
to be completed within a period of five months. He would also
submit before us that clause (6) of the agreement of sale
contemplates a specific clause that would clearly demonstrate
the intention of the parties. He would submit to this Court
that this material aspect is not dealt with by the Trial Court
while recording its finding as to whether time was the essence
of contract. Learned counsel would further submit that the
Trial Court has not at all examined the evidence of PW.1,
wherein it is elicited that subsequent to agreement of sale
pertaining to suit schedule property, the respondent/plaintiff
had opened a new shop at OTC Road, Chickpet, Bengaluru on
01.10.2006 and the respondent/plaintiff had invested a sum of
Rs.2,00,00,000 in opening that shop. In this background,
learned counsel for the appellant/defendant would submit to
this Court that the Trial Court has totally misread Exs.P-5 and
P-6. The Trial Court has virtually proceeded to presume that
under Exs.P-5 and P-6, the respondent/plaintiff had a sum of
Rs.2,00,00,000/- so as to perform his part of contract. He
would vehemently argue and contend before this Court that as
per Exs.P-5 and P-6, the respondent/plaintiff has requested for
credit facility from the financial institution and the same were
granted conditionally to be utilized for specific purpose. He
would submit to this Court that the credit facility would not in
itself establish the financial capacity to perform his part of
contract. This material aspect is virtually misread and thereby
the Trial Court has erred in arriving at a wrong conclusion.
Learned counsel would take us to Ex.P-4 which is the letter
addressed by respondent/plaintiff and would submit to this
Court that on meticulous reading of Ex.P-4 it can be gathered
that respondent/plaintiff was not ready and willing to complete
his part of contract.
4. Learned counsel for the appellant/ defendant would
further contend before this Court that respondent/plaintiff is
required to be ever ready and willing to perform his part of
contract and this requirement has to be tested through out till
agreement holder succeeds. He would submit that after the
suit was decreed and respondent/plaintiff was called upon to
deposit the balance sale consideration, even after granting two
months of time, the respondent/plaintiff was not in a position
to deposit the balance amount and accordingly, extension of
time was sought. This application seeking extension of time in
itself would disentitle the respondent/plaintiff from seeking
discretionary relief of specific performance. Learned counsel
appearing for the appellant/defendant would further take us to
agreement of sale as per Ex.P-1 and would submit to this
Court that it is the respondent/plaintiff who got the suit
agreement drafted and it was at his request the initial time of
two months was changed to three months and then finally to
five months. The appellant/defendant had no obligation in the
agreement. All that she was required was to come forward to
execute sale deed. It was for the respondent/plaintiff to
mobilize Rs.1,88,00,000/- and thereafter intimate the
appellant/defendant. In the present case on hand, the
respondent/plaintiff had no balance sale consideration and he
was not even in a position to mobilize the same. There is
absolutely no material on record to demonstrate that he had
balance sale consideration and he was willing to secure sale
deed by making payment. All these material aspects are not
properly appreciated by the Court below. The clinching
rebuttal evidence is discarded without assigning any reasons.
On these set of grounds, learned counsel appearing for the
appellant/defendant would submit to this Court that the
judgment and decree of the Trial Court suffers from serious
perversity and same is palpably erroneous and would warrant
interference by this Court.
5. Per contra, learned counsel appearing for the
respondent/plaintiff would vehemently argue and contend
before this Court that the respondent/plaintiff is a
businessman and has a turnover of Rs.10,00,000/- per day.
The respondent/plaintiff has paid an advance amount of
Rs.10,00,000/- on the date of execution of the suit agreement
as per Ex.P-1. He would refute the contentions raised by the
appellant/defendant in regard to stand taken by the
appellant/defendant that time is the essence of contract. He
would submit to this Court that the parties to the suit
agreement had absolutely no intention to treat time as the
essence of contract. He would even otherwise submit to this
Court that since there is a clause contemplating refund of
advance amount in the event of failure to complete the
transaction, time cannot be an essence of contract. Learned
counsel for the respondent/plaintiff would further submit to
this Court that the period mentioned at the first instance in
the suit agreement was in fact altered from two months to five
months at the instance of the appellant/defendant. He would
further submit to this Court that the appellant/defendant has
taken recourse to cancel the suit agreement only after receipt
of letter issued by the respondent/plaintiff as per Ex.P-2,
which is dated 08.11.2006. Learned counsel for the
respondent/plaintiff would further contend that the
extension/alteration in regard to period stipulated in the
agreement was at the instance of appellant/defendant since
her son who was carrying business in the suit schedule
property was unable to clear the stock. Insofar as allegations
that respondent/plaintiff has withdrawn an amount of
Rs.1,88,00,000/- which was deposited after passing of the
decree in the earlier round of litigation, learned counsel for the
respondent/plaintiff would submit to this Court that since this
Court allowed the appeal filed by the appellant/defendant and
the judgment and decree was set aside, the
respondent/plaintiff being a businessman was justified in
withdrawing the amount and as such, no adverse inference
can be drawn against the withdrawal of the amount by the
respondent/plaintiff.
6. Learned counsel for the respondent/plaintiff would
rely on the judgment of the Hon'ble Apex Court rendered in
Azhar Sultana vs. B. Rajamani and Others reported in AIR
2009 SC 2157 and would submit to this Court that
respondent/plaintiff to demonstrate his readiness and
willingness is ready to deposit the amount as and when Court
directs to deposit the same. Learned counsel would further
submit to this Court that the respondent/plaintiff has been
cross-examined extensively and there is absolutely no cross-
examination in regard to capability of respondent/plaintiff to
pay the balance sale consideration. On these set of grounds,
the learned counsel for the respondent/plaintiff submits to this
Court that the judgment and decree passed by the Trial Court
in decreeing the suit filed by the respondent/plaintiff is in
accordance with law and is based on cogent and clinching
evidence adduced by the respondent/plaintiff. The judgment
and decree does not suffer from any perversity and as such,
would not warrant any interference by this Court.
7. We have heard learned counsel for the
appellant/defendant and learned counsel for the
respondent/plaintiff at length. Perused the pleadings of the
parties. We have meticulously re-examined the oral and
documentary evidence on record.
8. On re-examination, the following points would arise
for consideration in the present case on hand:
1) Whether the finding of the Court below that
time is not the essence of contract, is perverse
and palpably erroneous?
2) Whether the Court below was justified in
holding that respondent/plaintiff is ready and
willing to perform his part of contract, is perverse
and contrary to rebuttal evidence adduced by the
appellant/defendant?
3) Whether the finding of the Court below that
if the discretionary relief of specific performance is
not granted, it would cause hardship and
inconvenience to the respondent/plaintiff, is
perverse and the same suffers from serious
infirmities?
Re: Point No.1:
9. The agreement of sale executed by the
appellant/defendant as per Ex.P-1 is dated 24.04.2006. The
property agreed to be sold is a commercial building. The sale
consideration is fixed at Rs.1,98,00,000/-. At clause (3),
there is a specific recital that the sale transaction has to be
completed within five months. At clause (4), it is clearly
stated that time is the essence of contract. At clause (6) of
the suit agreement, it is agreed by the parties that if the
agreement holder evades to fulfill his part of the contract
within two months, then he cannot claim any refund of
advance paid by him to the vendor. At clause (3) of the suit
agreement, in place of three months, the same is altered and
it is written as five months. The appellant/defendant had even
affixed the signature for having carried out alteration.
However, in the subsequent clause, the period of two months
fixed is unaltered. The appellant/defendant has not seriously
disputed her signature at clause (3) where she has affixed her
signature. What is disputed by the appellant/defendant is that
initially the period stipulated in the agreement was two
months and at the instance of the respondent/plaintiff, the
time stipulated in the suit agreement was altered thrice. Later
it was mentioned as three months and lastly, it was altered as
five months. Since the parties to the agreement have
mutually agreed in extending time, having regard to the
peculiar facts and circumstances of the case, it indicates that
time was never intended by the parties as the essence of the
contract. The appellant/defendant has not substantiated the
plea that time was the essence of contract and
respondent/plaintiff has evaded to perform his part of contract
within the stipulated time. It is trite law that where a contract
relates to sale of an immovable property, it will normally be
presumed that time is not the essence of the contract. The
Hon'ble Apex Court in catena of judgments has held that
fixation of period within which the contract has to be
performed does not make a stipulation as to time as the
essence of contract. The agreement also has to be examined
in terms of the relationship between the parties. During trial, it
is forthcoming that appellant/defendant had acquaintance and
cordial relationship with the respondent/plaintiff. Hence, the
time stipulated has to be understood that parties intended to
complete the transaction at the earliest. The suit agreement
in the present case on hand provides that vendor shall have
the right to waive off the advance payment, in the event, the
vendee evades or fails to fulfill the contract within two months
and the same would re-affirm the presumption that in a
contract for sale of immovable property, time is not the
essence of contract.
10. The entire evidence on record if re-examined
meticulously, we are of the view that time is not affirmatively
stipulated in the suit agreement as per Ex.P-1 and where time
is not stipulated in the contract as essential for performance, it
cannot be inferred that time was the essence of contract. In
that view of the matter, the findings recorded by the Trial
Court that time is not the essence of contract is in accordance
with law and the same would not warrant any interference by
this Court. Accordingly, the point No.1 formulated above is
answered in the negative.
Re: Point No.2:
11. The respondent/plaintiff has raised a plea that he
had been all along ready and willing to perform his part of
contract. At para 9 of the plaint, to substantiate his stand in
regard to readiness and willingness has specifically pleaded
that he was anxious to complete the sale transaction at the
earliest and there is also an averment indicating that he had
sufficient funds to complete the sale transaction. At para 15
of the plaint, he has specifically pleaded that he is ready and
willing to perform his part of contract. The
respondent/plaintiff has specifically stated at para 9 that
appellant/defendant's son who was carrying on business was
required to dispose of the stock and in this background, it is
the appellant/defendant who sought time. This averment in
the plaint that appellant/defendant was unable to handover
possession since her son was carrying on business in the suit
schedule property and he was not in a position to clear the
stock is pleaded for the first time in the plaint. The above said
averment is significant and would also have a bearing on the
controversy between the parties. The above said contention
of the respondent/plaintiff does not find a place in the suit
agreement as per Ex.P-1. Even in Ex.P-2, which is a letter
written by the respondent/plaintiff, there is absolutely no
whisper in regard to appellant/ defendant's son being in
possession of the suit schedule property. The
appellant/defendant on receipt of notice as per Ex.P-2 has
issued a notice intimating the cancellation of suit agreement
as per Ex.P-3. As a reply to this cancellation, the
respondent/plaintiff issued a reply notice as per Ex.P-4. Para
5 of the said reply notice vide Ex.P-4 would clinch the issue in
the present case on hand. Even in this reply notice which is
dated 13.12.2006, the respondent/plaintiff has not stated
anything in regard to handing over of possession. There is no
reference that appellant/defendant's son was squatting over
the suit schedule property. There is no recital in the suit
agreement which obligates the appellant/defendant to
handover possession. At para 5 of the reply notice as per
Ex.P-4, the respondent/plaintiff has alleged that
appellant/defendant has failed to provide documents
pertaining to the property agreed to be sold. It is also stated
at para 5 that unless appellant/defendant furnishes this
document, the respondent/plaintiff will not be able to secure
permission and clearance from the Income Tax authorities to
complete the formalities for execution and registration of sale
deed. The averments made in para 5 of the reply notice
issued by respondent/plaintiff is given a total go-by at the
time of filing of the suit. The respondent/plaintiff at the time
of filing of the suit has come up with a totally different version.
In the plaint, the respondent/ plaintiff has stated that
appellant/defendant's son is unable to clear the stocks lying in
the suit schedule property and as such, they need some more
time to execute the sale deed. If this inconsistent plea in the
reply notice as per Ex.P-4 and the averments made in para 9
of the plaint are examined, the defence set up by the
appellant/defendant that alteration in the time stipulated in
the suit agreement was at the instance of the
respondent/plaintiff stands probabalised.
12. Admittedly, the respondent/plaintiff was required to
mobilize Rs.1,88,00,000/-. The suit is filed by relying on Ex.P-
5 which is a sanction of credit facility by Axis Bank.
Admittedly, the suit is filed on 27.01.2007. This endorsement
issued by the Axis Bank is secured by the respondent/plaintiff
on 26.12.2007. The Trial Court has got carried away by this
document. On meticulous examination of this document, what
is forthcoming is that Axis Bank has sanctioned the credit limit
aggregating to Rs.2.00 Crores. It is still a sanction and it is
subject to respondent/plaintiff securing the signatures of
company and guarantors. Along with the endorsement, the
terms and conditions for credit facility is also produced by the
respondent/plaintiff. The purpose of release of Rs.2.00 Crores
is to carry out interior decoration, furniture and fitting etc., for
new branches and renovation of existing branches. So on
perusal of Ex.P-5, even as on the date of filing of the suit, the
respondent/plaintiff had not mobilized Rs.1,88,00,000/-. What
was likely to be released by Axis Bank was towards interior
decoration, furniture and fitting for new branches.
13. At this juncture, we would like to revisit the
pleadings at para 10 of the plaint. For better understanding,
we would cull out para 10 of the plaint which reads as under:
"10. The plaintiff submits that, on 1st day of
October 2006, he opened a new showroom at OTC
Road, Chickpet, Bangalore, which was attended by
the defendant, her husband and also by her son and
at that time also the plaintiff insisted that the
defendant should fix a date for registration. The
defendant promised again that within a short time a
date will be fixed and the same will be informed to
the plaintiff."
14. On examination of this averment, what is
forthcoming is that subsequent to securing agreement for sale
from the appellant/defendant, the respondent/plaintiff has
opened a new showroom at OTC Road, Chickpet, Bangalore
and hence, it would probabalize that the money mobilized
through credit facility by the respondent/plaintiff was to carry
out interior decoration, furniture and fitting etc., for new
branches and renovation of existing branches. The averments
made at para 10 would also indicate that respondent/plaintiff
as on the date of filing of the suit, neither was ready to
perform his part of contract by mobilizing the funds nor he had
any intention to complete the sale transaction by paying the
balance sale consideration of Rs.1,88,00,000/- and thereby
the ingredients of willingness is found missing in the present
case on hand. The fact that the period stipulated in the
agreement was changed thrice also indicates that
respondent/plaintiff had no intention to perform his part of
contract. The respondent/plaintiff has contended during trial
that the said alteration in regard to period was altered at the
instance of the appellant/defendant. The same is not at all
substantiated by the respondent/plaintiff. Introducing new
terms and modification of existing terms which are contrary to
the agreement shows lack of willingness on the part of
respondent/plaintiff to perform his part of contract. The entire
material on record indicates that respondent/plaintiff never
intended to keep the contract subsisting with preparedness to
fulfill his obligation and accept the performance when the time
for performance arrived. It is trite law that person seeking
benefit of specific performance of contract must manifest that
his conduct has been blemishless through out so that Court
would grant relief on the basis of conduct of person seeking
relief. Readiness and willingness has to be analysed on the
basis of the conduct of the parties, attendant circumstances
and also evidence on record.
15. The respondent/plaintiff is seeking enforcement of
contract and is claiming relief on the premise that he is a
reputed businessman and having showrooms at Bengaluru,
Chennai and Kanchipuram and he has turnover of nearly
Rs.10,00,000/- per day. That in itself would not suffice and
enable the respondent/plaintiff in seeking discretionary relief
of specific performance of contract. On meticulous perusal of
the pleadings and documents produced along with the plaint,
the same would establish that respondent/plaintiff had no
money as on the date of the filing of the suit so as to perform
his part of contract. One more relevant factor which would go
against the respondent/plaintiff is failure on the part of the
respondent/plaintiff to deposit the amount after the suit was
decreed. The suit was decreed by the Trial Court by judgment
and decree dated 06.01.2012. The Trial Court having decreed
the suit directed the respondent/plaintiff to deposit balance
sale consideration of Rs.1,88,00,000/- within two months from
the date of the order. The respondent/plaintiff filed an
application on 05.03.2012 which is one day prior to expiry of
two months. At para 1 of the affidavit filed in support of the
application filed under Sections 148 and 151 of CPC, the
respondent/plaintiff has averred that he has applied for loan
with Standared Chartered Bank at Chennai and it is also stated
in the affidavit that Bank has also approved loan to the extent
of Rs.11,00,00,000/- and Bank will be disbursing an initial
amount of Rs.2,00,00,000/- within a short time. It is also
averred in the affidavit that there was delay in disbursal of the
loan on account of delay in getting legal opinion by the said
Bank. On these set of explanations, the respondent/plaintiff
has sought for extension of time to enable him to deposit the
balance consideration of Rs.1,88,00,000/-.
16. If the averments made in the affidavit filed in
support of the application is examined the same would clinch
the entire issue in regard to readiness and willingness. It is
trite law that agreement holder has to prove his readiness and
willingness from the date of agreement till the litigation attains
finality. He has to prove his readiness and willingness at
every stage of hearing. If Ex.P-5 and the application filed
subsequent to decreetal of the suit are taken into
consideration, we are of the firm view that neither
respondent/plaintiff was ready to perform his part of contract
nor there was willingness on the part of respondent/plaintiff to
complete the sale transaction by paying the balance sale
consideration of Rs.1,88,00,000/-.
17. The Trial Court has proceeded on an assumption
that respondent/plaintiff is a reputed businessman. It has also
got carried away by the fact that respondent/plaintiff who is a
partner of a firm has got some amount in the Bank. The Court
below having granted discretionary relief of specific
performance had directed the respondent/plaintiff to deposit
the balance sale consideration. The purport of imposing such
condition is to test readiness and willingness of a party who is
granted discretionary relief of specific performance. The
natural corollary of default in deposit would indicate that
agreement holder is not ready and willing to perform his part
of contract. This material aspect is not at all examined by the
Trial Court while examining the readiness and willingness of
the respondent/plaintiff.
18. The Trial Court has also not dealt with the
explanation offered in the plaint that appellant/ defendant
wanted some more time to clear the stock which is not stated
in his letter as per Ex.P-2 dated 08.11.2006 and also reply
notice as per Ex.P-4. The said plea is not at all substantiated
by cogent evidence. The failure of respondent/plaintiff to
establish the above said plea set out by him in the plaint
would draw only one inference that respondent/plaintiff has
not come to Court with clean hands and as such, he cannot be
favoured with a decree of specific performance. This also
indicates that respondent/plaintiff has failed to demonstrate
that his conduct has been blemishless through out. The
alteration of time stipulated in the agreement and failing to
mobilize funds would clearly go to show that
respondent/plaintiff did not possess Rs.1,88,00,000/- and
further he had no intention to purchase the suit property. It is
also forthcoming from the averments made in the plaint that
he has purchased one more property at OTC Road, Chickpet,
Bangalore and shop opening was held on 01.10.2006. All
these aspects would be an indicator that respondent/plaintiff
has made a feeble attempt in filing the present suit half
heartedly.
19. It is trite law that agreement holder need not
demonstrate his financial capacity either by producing relevant
documents or by producing the amount but, when the
agreement holder produces documents to demonstrate his
financial capability then he is bound to prove the same by
corroborating the said evidence during trial. The
respondent/plaintiff has relied on Ex.P-5 which is the sanction
of credit facility by Axis Bank and has tried to make out a case
before the Court below during trial that he had mobilized funds
and the same was available for him to pay the balance sale
consideration.
20. The readiness and willingness to perform the
contract cannot be discharged by simply giving oral evidence
stating that he is ready and willing to pay remaining
consideration. There must be specific evidence to show that
respondent/plaintiff took some concrete steps readying
performance of his part of contract. As on the date of filing of
the suit, the respondent/plaintiff has relied on Ex.P-5 dated
26.12.2007. The respondent/plaintiff has averred in the plaint
that he was ever ready and willing to perform his part of
contract and to substantiate his contention, the
respondent/plaintiff has relied on the sanction order issued by
the Axis Bank. The sanction order is in regard to credit facility
and the purpose of sanction is stated to be carrying out
interior decorations, furniture and fittings for new branches
and renovation of existing branches. So on perusal of Ex.P-5,
it is forthcoming that the respondent/plaintiff had not got the
money ready. The respondent/plaintiff in the present case on
hand has failed to establish that he had requisite amount with
him or was able to raise at all reasonable times. The
respondent/plaintiff with his well designed and calculated
manner has committed default in performing his part under
the agreement which would disentitle for equitable relief of
specific performance.
21. The substantive provision contained in Section
16(c) of the Specific Relief Act, 1963 though does not insist
upon a particular set of words, averments must, in substance,
indicate the continuous readiness and willingness of
respondent/plaintiff to perform his part of contract. The
readiness and willingness on the part of respondent/plaintiff
has to be in spirit and substance and not in letter or form.
The entire material on record would indicate that neither
respondent/plaintiff was ready as on the date of filing of the
suit nor he was ready when he had the benefit of a decree for
specific performance of contract. Though Trial Court had
granted two months' time to deposit the balance sale
consideration of Rs.1,88,00,000/-, the respondent/plaintiff
filed an application one day prior to expiry of two months
seeking extension of time. If this material aspect is taken into
consideration, it would reflect in regard to conduct of
respondent/plaintiff and an adverse inference has to be drawn
by holding that respondent/plaintiff was not at all continuously
ready and willing to perform his part of contract.
22. The finding recorded by the Trial Court on issue
No.1 is perverse and contrary to evidence on record. The Trial
Court while examining issue No.1 has totally misread the
evidence available on record. The Trial Court has proceeded
on a presumption that since respondent/plaintiff is a
businessman and has wholesale and retail Silk Saree
showrooms, that itself would establish his readiness and
willingness. The Trial Court has proceeded on these
assumptions which does not justify the material evidence
available on record. The Trial Court, in granting the relief of
specific performance, has acted capriciously and the discretion
is exercised where it ought not to have been exercised.
23. For the reasons stated supra, the point No.2
formulated above is answered in the affirmative.
Re: Point No.3:
24. The respondent/plaintiff is a businessman dealing in
Silk Sarees and allied fabrics both wholesale and retail. At
para 3 of the plaint, the respondent/plaintiff has specifically
stated that he has three big showrooms in Bengaluru City
itself and one showroom at Chennai and one at Kanchipuram.
In all five showrooms. He has stated that average turnover
per day from these sale outlets is around Rs.10,00,000/- per
day. If these pleadings are looked into, the finding of the Trial
Court that if discretionary relief of specific performance is not
granted, more hardship would be caused to the
respondent/plaintiff is not only palpably erroneous but the
same is perverse and suffers from serious infirmities. The
respondent/plaintiff is a businessman and has several
showrooms in various cities whereas the appellant/defendant
appears to be a widow with the present suit property being the
only property.
25. The respondent/plaintiff has entered into an
agreement with the appellant/defendant and the sale
consideration fixed was Rs.1,98,00,000/-. It is not in dispute
that the respondent/plaintiff has paid a sum of Rs.10,00,000/-
as on the date of execution of agreement of sale.
Rs.2,00,000/- was paid earlier to execution of suit agreement
and Rs.8,00,000/- was paid as on the date of execution of suit
agreement as per Ex.P-1. The balance sale consideration is
Rs.1,88,00,000/- which is a huge amount. Admittedly, the
advance amount parted by respondent/plaintiff is very
meager. It is an unfair advantage on the part of the
respondent/plaintiff over the appellant/defendant within the
meaning of Section 20(2)(a) of the Specific Relief Act, 1963.
Since the material on record clearly shows that subsequent to
execution of suit agreement, the respondent/plaintiff has
purchased one more property at OTC Road, Chickpet,
Bengaluru and the opening of the new showroom was in the
month of October 2006, an adverse inference has to be drawn.
The respondent/plaintiff never really intended to complete the
sale transaction by paying the balance sale consideration of
Rs.1,88,00,000/-. Having regard to the circumstances of the
case, we are of the view that the respondent/plaintiff has an
unfair advantage over the appellant/defendant and in the
circumstances, though the contract cannot be rendered
voidable makes it inequitable to enforce specific performance.
Accordingly, point No.3 formulated above is answered in the
negative.
26. In view of discussion made by us while examining
point Nos.1 to 3, we are of the view that the discretion
exercised by the Court below is arbitrary and contrary to
evidence on record and suffers from perversity. The learned
Judge has proceeded to record a finding that the
respondent/plaintiff has established his readiness and
willingness and this conclusion is arrived at by relying on Ex.P-
5 and on the pleadings, wherein the respondent/plaintiff has
stated that he is a reputed businessman having wholesale and
retail outlets and showrooms around Bangalore, Chennai and
Kanchipuram. This finding arrived at by the Trial Court suffers
from serious infirmities.
On refund:
27. The respondent/plaintiff succeeded before the Court
below and the Court below granted discretionary relief of
specific performance of contract. This Court on re-
appreciation of oral and documentary evidence has reversed
the judgment and decree passed by the Court below. We
have come to conclusion that the respondent/plaintiff is not
entitled for relief of specific performance. The
respondent/plaintiff has paid an advance amount of
Rs.10,00,000/- in the year 2006. The said money is being
utilized by the appellant/defendant for a period of 14 years.
The advance amount of Rs.10,00,000/- is a substantial
amount. Though in context of the total sale consideration of
Rs.1,98,00,000/-, it may appear to be negligible but, the
advance payment is substantial and the same is utilized by the
appellant/defendant for almost 14 years. The payment of
advance amount is not in dispute. This Court being the
Appellate Court has to do complete justice to the parties. The
compelling equities in the present case on hand would compel
this Court to shape the reliefs.
28. The respondent/plaintiff apart from seeking larger
relief of specific performance, in the alternative, has also
sought for additional relief which is culled out as follows:
"ii. Further, this Honourable court may be
pleased to grant to the plaintiff such other relief/s
as this Honourable court deems fit to grant to the
plaintiff in the circumstances of the case."
29. On reading of the additional relief, we are of the
view that they are wide enough to embrace the alternate relief
of refund. We are of the firm view that the advance amount
should not be allowed to be forfeited, more particularly when
the appellant/defendant has not suffered any loss. On the
contrary, the advance amount of Rs.10,00,000/- is utilized by
the appellant/defendant for the last 14 years. In the present
case on hand, the respondent/plaintiff succeeded before the
Court of first instance and had the benefit of a decree. Now
we have reversed the judgment and decree and we have
denied the relief of specific performance by holding that it is
inappropriate and not a fit case to grant discretionary relief of
specific performance. In this background, where
respondent/plaintiff is successful in securing the decree and if
he were to lose before the Appellate Court, the question that
would arise before this Court is whether refund of money can
be considered in absence of specific prayer seeking refund as
contemplated under Section 22(2) of the Specific Relief Act,
1963. A question would also arise as to whether in absence of
specific wordings in regard to alternate prayer on refund, the
Court can exercise discretion under Order VII Rule 7 and
under Order XLI Rule 33 of Code of Civil Procedure to do
substantial justice to the parties.
30. The appellant/defendant has not disputed the
agreement. Even payment of Rs.10,00,000/- is not in dispute.
In that view of the matter, we are of the view that there is no
bar to consider and grant refund even if not specifically
worded in the alternate prayer by the respondent/plaintiff. In
the present suit, all the facts giving rise to the alternative
claim are fully stated in the prayer column and the fact that
respondent/plaintiff has not formally asked for the relief on
the alternate claim is no bar for granting of relief on that
basis. In an identical case in the case of Y.R. Mahadev .vs.
K. Dayalan reported in 1997(4) KLJ 264, the learned Single
Judge of this Court has held that the trial Court ought to have
exercised jurisdiction suo motu under the Specific Relief Act
and ought to have ordered for refund of the advance amount.
Further, the learned Single Judge was of the view that it is a
well known principle that no one should be allowed to enrich
oneself at the costs of another. In the above said case, the
plaintiff had sought for an alternate relief to grant such other
reliefs as the Court may deem fit to grant in the circumstances
of the case. This Court by having recourse to Section 21(5) of
the Specific Relief Act, held that it is just and proper to direct
the owners to refund the advance amount with interest. This
principle is also applicable to the present set of facts.
31. This Court needs to invoke provision of Order XLI
Rule 33 of CPC. This Rule is new and is based on Order LVIII
Rule 4 of Rules of Supreme Court in England. It is wider than
Order XLI Rule 4 of CPC. Object of the Rule is to enable the
Appellate Court to do complete justice between the parties.
The sweep of the power under Rule 33 is wide enough to
determine any questions. The only constraint on the power of
Appellate Court is that questions raised must properly arise
out of the judgment of the lower Court. The
respondent/plaintiff has proved due execution of suit
agreement and payment of Rs.10,00,000/-. He had the
benefit of decree of specific performance of contract. We have
reversed the same. Hence, question of refund on account of
reversal of decree arises out of judgment of the lower Court.
Even in absence of specific prayer in regard to refund, we
deem it fit to grant refund by exercising power under Order
XLI Rule 33 of CPC. Further, we have also held that alternate
relief in the present case embraces relief of refund. The
question that would arise is, whether Court can order for
refund in absence of prayer. The bar under Section 22(2) is
against the respondent/plaintiff. But such a bar would not
operate against Court and curtail its power under Order XLI
Rule 33 of CPC.
32. For the foregoing conclusions, in order to avoid
gross injustice to the respondent/plaintiff, we would deem it fit
to direct the appellant/defendant to refund the advance
amount of Rs.10,00,000/- with simple interest at the rate of
6% p.a. from the date of suit till realisation.
33. For the reasons stated supra, while answering point
Nos.1 to 3, the appeal deserves to be allowed. Accordingly,
the appeal is allowed. The judgment and decree of the Court
below passed in O.S.No.814/2007 granting relief of specific
performance is set aside. The appellant/defendant is directed
to refund the advance amount of Rs.10,00,000/- with simple
interest at the rate of 6% p.a. from the date of suit till
realisation.
Draw modified decree accordingly.
Sd/-
JUDGE
Sd/-
JUDGE
CA
