Karnataka High Court
Sri Mohammed Farughuddin S/O Jawadali vs Sri Ramachandra Balu Shinde on 27 February, 2024
1
R
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 27th DAY OF FEBRUARY 2024
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
REGULAR FIRST APPEAL NO.100196 OF 2014 (SP)
BETWEEN:
SRI MOHAMMED FARUGHUDDIN,
S/O JAWADALI, AGE:49 YEARS,
OCC:AGRICULTURE AND SERVICE,
R/O: KAUP, TQ and DIST: UDUPI,
REPRESENTED BY HIS GPA HOLDER SRI. A.M.FAROKHI
...APPELLANT
(SRI SOURABH SUNDAR, ADVOCATE FOR
SRI K L PATIL APPEARED THROUGH VC)
AND:
1. SRI RAMACHANDRA BALU SHINDE,
SINCE DECEASED BY HIS LRS
1(a) SMT KASTURI,
W/O RAMACHANDRA SHINDE,
AGE: 60 YEARS, OCC:HOUSEHOLD.
1(b) SRI TANAJI,
S/O RAMACHANDRA SHINDE,
AGE: 40 YEARS, OCC:EMPLOYED.
1(c) SHURUTI,
D/O RAMACHANDRA SHINDE,
AGE: 36 YEARS, OCC:HOUSEHOLD.
1(d) AVAKKA,
D/O RAMACHANDRA SHINDE,
AGE: 32 YEARS, OCC: HOUSEHOLD
ALL R/O H.NO.20, NAVA AYODHYA NAGAR,
OLD HUBLI, HUBBALLI,
DIST: DHARWAD,
(AMENDMENT CARRIED OUT AS PER
ORDER DATED 01.08.2022)
...RESPONDENTS
(BY SRI S P SHANKAR, SR. COUNSEL A/W
SMT MAMATA G KULKARNI, ADVOCATE FOR R1 (A, B & D)
SRI PRASHANTH S KADADEVAR ADVOCATE FOR R1(C))
2
THIS RFA IS FILED UNDER SECTION 96 OF CPC., AGAINST
THE JUDGMENT AND DECREE DATED: 26.08.2014, PASSED IN OS
NO.406/2007, ON THE FILE OF PRINCIPAL SENIOR CIVIL JUDGE
AND JMFC., HUBLI, DISMISSING THE SUIT FILED FOR SPECIFIC
PERFORMANCE OF THE AGREEMENT OF SALE.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 15TH FEBRUARY 2024 AND COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE
FOLLOWING:
JUDGMENT
1. The Plaintiff filed a suit for the specific performance of a
contract to enforce the agreement for sale dated 20.07.2006. In the
alternative, Rs.11,51,000/- with interest @ 15% per annum is
claimed towards refund of earnest amount and damages.
2. The plaintiff claims Rs.5 lakhs is paid as advance
consideration amount, on 20.07.2006 by PW-1, the power of
attorney holder of the plaintiff, and the balance Rs.6,51,000/- was
to be paid at the time of registration of the sale deed. The
agreement stipulated six months to complete the sale transaction.
3. The plaintiff pleaded that he was always ready and
willing to perform his part of the contract and the defendant did not
come forward to execute the sale deed.
4. The defendant resisted the suit. The defendant admitted
execution of the agreement. However, took a plea that the time was
the essence of the contract. The defendant further contends that
the plaintiff did not pay the balance consideration amount within six
months as stipulated. The defendant claimed that he orally revoked
the agreement for sale dated 20.07.2006 as the transaction is not
completed within six months.
5. The trial Court has concluded that the agreement for
sale dated 20.07.2006 is proved. However, the decree for specific
performance is declined holding that the plaintiff failed to prove his
readiness and willingness to perform his part of the contract. The
trial Court passed a decree for refund of the earnest amount of
Rs.5,00,000/- along with interest at the rate of 6% per annum as
against the claim of 15% per annum. The decree for compensation
is also declined.
6. The trial Court held that the defendant has orally
revoked the agreement for sale. The defendant had also taken a
contention (by way of an amendment of written statement) that
power of attorney produced by PW1 marked at Ex.P.10 is concocted
and there was no power of attorney in favour of PW1 when the
agreement was entered on 20.07.2006. The finding on this issue is
against the defendant.
7. Aggrieved by the decree refusing specific performance
of the contract, the plaintiff is in appeal.
8. The defendant has accepted the decree for refund of the
earnest amount.
9. Learned counsel Sri.K.L.Patil, appearing for the
appellant raised the following contentions:
(i) The suit for specific performance is decreed for refund of the
earnest amount overruling defendant's contentions. The
agreement is held to be proved and the defendant did not
challenge the decree for refund of the earnest money. Thus,
he cannot dispute the execution of the agreement for sale.
(ii) Time is not the essence of the contract when it comes to the
sale of immovable property and this well-established principle
is not considered by the trial Court in proper perspective. The
trial court erred in holding that the time was the essence of
the contract dated 20.07.2006.
(iii) As per the terms of the agreement if balance consideration
amount is not paid within 6 months, then the defendant must
seek cancellation of the agreement by repaying earnest sale
consideration amount. The defendant did not get the
agreement cancelled and did not refund the advance
consideration amount. Thus, the finding that the defendant
has cancelled the agreement is erroneous.
(iv) The defendant has admitted in the cross-examination that the
plaintiff is a man of sufficient means. It established plaintiff's
readiness and willingness to perform the contract.
(v) Soon after noticing the public notice inviting objections to the
proposed sale of the properties by the defendant, to a third
party, the plaintiff filed the suit for the specific performance of
the contract. The trial Court erred in holding that the plaintiff
was not ready and willing to perform his part of the contract.
(vi) In the alternative, if specific performance is not possible for
any valid reason, there should have been a decree for
compensation in addition to the decree for refund of the
amount with 15% interest on the amount claimed.
10. In support of his contention, the learned counsel for the
appellant has relied on the following judgments:
(a) Man Kaur (Dead) by LRs vs. Hartar Singh Sangha
(2010) 10 SCC 512
(b) Swarnam Ramachandran vs. Aravacode Chakungal
Jayapalan, AIR online 2004 SC 907
(c) Balasaheb Dayandeo Naik (Dead) through LRs &
Ors vs. Appasaheb Dattatraya Pawar AIR 2008 SC
(d) Gaddipati Divija vs. Pathuri Samrajyam AIR online
2023 SC 290
(e) M/s Greater Ashoka and Land Development
Company vs. Kanti Prasad Jain (Deceased)
through LRs. SLP No.23655-56/2018
11. Learned Senior counsel Sri S.P.Shankar appearing on
behalf of the respondent/defendant would raise the following
contentions:
i. It is demonstrated in the cross-examination of the Pw-1
(the power of attorney holder of plaintiff) that Pw-1 has
spent Rs.5 lakhs (Amount allegedly with him after paying
Rs.5 lakhs as advance consideration amount) which the
plaintiff claims to have given to purchase the property.
Hence, PW1 had no money to complete the sale
transaction.
ii. The plaintiff alone could have spoken about his readiness
and willingness to perform his part of the contract and he
shied away from the witness box. The alleged power of
attorney holder is incompetent to speak about the
intention of the plaintiff to perform his part of the
contract.
iii. The agreement for sale marked at Ex.P17 does not appear
to be the one entered into on behalf of the principal. The
agreement does not refer to the power of attorney alleged
to have been executed in favour of PW-1. Even in the
plaint, there is no reference to the alleged power of
attorney in favour of PW-1. The alleged power of attorney
(Ex.P10) dated 02.02.2003 is concocted and antedated.
iv. Plaintiff sought two reliefs. Relief (a) is for the specific
performance of a contract. Relief (b) is an alternative
relief for refund of the earnest amount and compensation.
The Court has granted the decree for refund of the earnest
amount. Thus, the plaintiff is not an aggrieved person and
has no right to challenge the decree granting refund of the
earnest amount which is granted pursuant to the prayer
made in the plaint itself.
12. The learned Senior counsel appearing for the
respondents relied upon the following judgments:
(i) Vidyadhar vs. ManikRao and another (1999)3 SCC
(ii) Man Kaur (Dead) by LRs. vs. Harthar Singh
Sangha (2010) 10 SCC 512
(iii) N P Thirugnanam (Dead) by LRs vs.
Dr.R.JaganMohan Rao and others AIR 1996 SC
(iv) Loonkaran Sethia etc vs. Mr.Ivan E John & others
etc , AIR 1977 SC 336
(v) Mohinder Kaur vs. Sant Paul Singh (2019) 9 SCC
(vi) Janki Vashdeo Bhojwani & another vs. Indusind
Bank Ltd & others AIR 2005 SC 439
(vii) Lt.Cdr. MC Kendall vs. S. Chandrashekar ILR 1991
Kar 4142
(viii) Gangabai vs Vijay kumar and others AIR 1974 sc
(ix) Sharnamma vs Renuka and others (RSA
No.7034/2011)
13. The question whether the respondent in an appeal,
without there being any cross objection can challenge the adverse
finding resulting in an adverse decree, and can seek reversal of the
decree or part of the decree is no longer res integra. The question is
lucidly answered by the Apex Court in BANSARI AND OTHERS VS.
RAM PHAL (2003) 9 SCC 606. The relevant portion of the said
judgment is extracted as under.
10. xxxxxxxx A respondent may defend himself
without filing any cross-objection to the extent to which
decree is in his favour; however, if he proposes
to attack any part of the decree he must take cross-
objection. The amendment inserted by the 1976
amendment is clarificatory and also enabling and this may
be made precise by analysing the provision. There may be
three situations:
(i) The impugned decree is partly in favour of the
appellant and partly in favour of the respondent.
(ii) The decree is entirely in favour of the respondent
though an issue has been decided against the
respondent.
(iii) The decree is entirely in favour of the respondent and
all the issues have also been answered in favour of
the respondent but there is a finding in the judgment
which goes against the respondent.
11. In the type of case (i) it was necessary for
the respondent to file an appeal or take cross-objection
against that part of the decree which is against him if he
seeks to get rid of the same though that part of the decree
which is in his favour he is entitled to support without
taking any cross-objection. The law remains so post-
amendment too. In the type of cases (ii) and (iii) pre-
amendment CPC did not entitle nor permit the respondent
to take any cross-objection as he was not the person
aggrieved by the decree. xxxxx xxxxxxxxxxxxxx.
12. The fact remains that to the extent to which the decree
is against the respondent and he wishes to get rid of it he
should have either filed an appeal of his own or taken
cross-objection failing which the decree to that extent
cannot be insisted on by the respondent for being
interfered, set aside, or modified to his advantage.
xxxxxxxxxxxxxxx...... It follows as a necessary corollary
from the above said statement of law that in an appeal
filed by the defendant laying challenge to the relief of
compensation or refund of money or any other relief while
decree for specific performance was denied to the plaintiff,
the plaintiff as a respondent cannot seek the relief of
specific performance of contract or modification of the
impugned decree except by filing an appeal of his own or
by taking cross-objection.
14. In the case on hand, the trial Court has passed a decree
for refund of the earnest amount. The decree for specific
performance is refused. Thus, both the plaintiff and defendant were
entitled to challenge the decree to the extent of denial of relief
claimed by them. The plaintiff has filed appeal and claiming a
decree for specific performance. The defendant has not filed an
appeal. The defendant has accepted the decree for refund of
earnest amount. The decree for refund of money is based on the
finding that the execution of the agreement for sale is proved.
15. The alternative prayer in the plaint qualified by the
expression, "Alternatively if this Hon'ble Court comes to the
conclusion that for any reason the specific performance is not to be
granted,". The words " for any reason" has to be understood as
"valid reason" as such the plaintiff is an aggrieved party when the
specific performance is refused.
16. In view of the law laid down in BANARASI supra, the
option to challenge the adverse finding in a judgment, being a
respondent, without there being any cross objection, is available
only when the respondent can support the decree and not when he
attacks the decree to set aside it either partially or fully.
17. Referring to the judgment of the Hon'ble Apex Court in
GANGABAI vs VIJAY KUMAR AND OTHERS reported in AIR
1974 SC 1126, which is followed by the co-ordinate bench of this
Court in SHARNAMMA vs RENUKA AND OTHERS (RSA
No.7034/2011), it is urged that the challenge to an adverse finding
without cross objection by the respondent is maintainable. Closer
scrutiny of the facts in both cases referred to above would reveal
that in both cases, the decrees were in favour of the respondents
who challenged the adverse findings in the judgments in an appeal
filed by the other party. The position in this case is different. There
is not just an adverse finding, but also an adverse decree against
the respondent which is not questioned by either filing an appeal or
cross objection.
18. Thus, for the reasons recorded above, the respondent
who has not filed cross objection cannot assail the finding on proof
of agreement dated 20.07.2006 or the power of attorney. Hence it
is not necessary to analyse the evidence and judgments cited in
support of the contention that the agreement is not proved.
19. Other points that arise for consideration are;
i. Whether the time was the essence of the contract dated
20.07.2006?
ii. Whether the defendant/respondent has rescinded the
contract?
iii. Whether the plaintiff/appellant has proved his readiness and
willingness to perform his part of the contract?
iv. Whether the plaintiff/appellant is entitled to a decree for
specific performance of contract or damages in the
alternative?
20. Whether the time was the essence of the contract has
to be understood primarily from the terms and conditions of the
contract. If there is other evidence or circumstances which throw
light on the controversy, they must be analysed.
21. The relevant clauses in the agreement for sale dated
20.07.2006 are extracted below:
£ÀªÀÄä ªÀÄ£ÉvÀ£ÀzÀ CqÀZÀuÉAiÀÄ ¸À®ÄªÁV dgÀÆgÀ ºÀt ¨ÉÃPÁVzÀÝjAzÀ ¸ÀzÀgÀ d«ÄãÀÄ
ªÀiÁgÁlPÉÌ ºÀZÀѯÁV ¤ÃªÀÅ J®èjVAvÀ ºÉaÑ£ÀªÀ AiÉÆÃUÀå Q«ÄäwÛUÉ RjâUÉ
¨ÉÃrzÀÝjAzÀ ¤ªÀÄUÉ RAqÀªÄÀ PÁÛ ºÀ£Æ
É ßAzÀÄ ®PÀë LªÀvÉÆÛAzÀÄ ¸Á«gÀ gÀÆ¥Á¬Ä
(11,51,000-00) UÀ½UÉ RjâUÉ PÉÆqÀ®Ä M¦àPÆ
É AqÀÄ EªÀwÛ£À ¢ªÀ¸À ¸ÀAZÀUÁgÀ CAvÁ
LzÀÄ ®PÀë gÀÆ¥Á¬Ä (5,00,000-00) UÀ¼À£ÄÀ ß gÉÆPÀÌ ¥ÀqÉzÄÀ PÉÆArzÉÝãÉ. ¨ÁQ G½zÀ
gÀPÀA DgÀÄ ®PÀë LªÀvÉÆÛAzÀÄ ¸Á«gÀ gÀÆ¥Á¬Ä (6,51,000-00) UÀ¼À£ÀÄß ¤ÃªÀÅ £À£ÀUÉ
EªÀwÛ¤AzÀ 6 (DgÀÄ) wAUÀ¼ÀzÉƼÀUÁV Rjâ ¥ÀvÀæ £ÉÆÃAzÁ¬Ä¹PÉƼÀÄîªÀ PÁ®PÉÌ ªÉÄ:¸À:gÀ
¸ÀªÀÄPÀëªÀÄ PÉÆqÀ¨ÉÃPÀÄ. ¸ÀzÀj Rjâ ¥Àvæz
À À ¸ÁÖA¥ï qÀÆån ªÀ £ÉÆÃAzÀt RZÀÄð ¤ÃªÀÅ
ªÀ»¹gÀÄwÛÃj. ¸ÀzÀj d«ÄãÀÄ Rjâ PÁ®PÉÌ ¤ªÀĪÀÄä PÀ§eÁPÉÌ PÉÆqÀÄvÉÛãÉ.
¸ÀzÀj CªÀ¢üAiÀÄ M¼ÀUÁV ¤ÃªÀÅ Rjâ ¥ÀvÀæ £ÉÆÃAzÁ¬Ä¹PÉƼÀî¢zÀÝ°è ¸ÀzÀj
ªÀåªÀºÁgÀ gÀzÀÄÝ¥Àr¹PÉÆAqÀÄ ¸ÀzÀj ¤ÃªÀÅ PÉÆlÖ ¸ÀAZÀUÁgÀ gÀPÀA ¤ªÀÄUÉ ¥ÀgÀvÀ PÉÆqÀÄvÉÃÛ £É.
EzÀPÉÌ AiÀiÁªÀÅzÉà vÀgÀºÀzÀ §rØ ªÀUÊÉ gÉ EgÀĪÀÅ¢®è.
(Emphasis Supplied)
22. From the above said clauses in the agreement, no
difficulty in holding that six months' time is fixed for payment of
balance consideration amount by the purchaser. At two places in
the agreement, six months' time is fixed for payment of the balance
consideration amount. In addition, it is also evident that the right to
cancel the contract is also available to the vendor in case the
balance consideration amount is not paid within the time prescribed.
This is apparent from the expression "¸ÀzÀj CªÀ¢üAiÀÄ°è Rjâ ¥Àvæª
À À£ÀÄß
£ÉÆÃAzÀÄ ªÀiÁr¹PÉƼÀîzÉà EzÀÝgÉ ¸ÀzÀj PÀgÁgÀÄ ¥ÀvæÀªÇÀ gÀzÁÝUÄÀ vÀÛzÉ JAzÀÄ ¤¦-17 gÀ°è
§gÉAiÀįÁVgÀÄvÀÛzÉ."
23. Sri K. L. Patil, the learned counsel appearing for the
plaintiff/appellant would contend that the obligation is cast on the
vendor to get the agreement cancelled and to repay the earnest
consideration amount. Since it is not cancelled by executing a deed
followed by repayment of earnest consideration amount, the
contract continues to subsist and leads to the conclusion that time
is not the essence of the contract.
24. Probably, this is one plausible interpretation. However,
how the parties have understood the terms of contract is relevant
and same needs consideration. For lack of precision in the language
employed in the terms of the contract, or for any reason, if it
attracts dual or multiple interpretations, then, the Court has
endeavor to ascertain the intention of the parties from the evidence
and attending circumstances.
25. At this juncture, it is necessary to refer to the relevant
portion of the evidence of PW1 in the cross-examination.
Rjâ ªÀåªÀºÁgÀªÀÅ MlÄÖ gÀÆ.11,51,000-00 DVzÉ. ªÁ¢ £À£ßÀ PÀqÉ D¹Û Rjâ
ªÀiÁqÀĪÀ ¸À®ÄªÁV £ÀUÀzÀÄ ºÀtªÀ£ÄÀ ß ElÄÖ ºÉÆÃVzÀÝ£ÀÄ. CzÀgÀ°è £Á£ÀÄ
gÀÆ.5,00,000-00 UÀ¼À£ÀÄß PÉÆnÖzÝÉ Ã£É. ªÁ¢ £À£ßÀ ªÀÄ£ÉAiÀÄ°è gÀÆ.10,00,000-00
£ÀUÀzÀÄ ºÀtªÀ£ÀÄß ElÄÖ ºÉÆÃVzÀÝgÄÀ , ¸ÀzÀj ªÀåªÀºÁgÀzÀ PÁ®PÉÌ ºÀħâ½îAiÀÄ°è ¸ÉÖÃmï
¨ÁåAQ£À°è ªÁ¢AiÀÄzÀÄ MAzÀÄ CPËAmï EvÀÄÛ. ºÀħâ½îAiÀÄ°è ªÁ¢AiÀÄ ºÉ¸Àj£À°è
SÁvÉUÀ¼ÀÄ AiÀiÁªÀ AiÀiÁªÀ ¨ÁåAQ£À°èzÝÀ ªÅÀ JAzÀÄ £Á£ÀÄ PÉý®è. gÀÆ.5,00,000-00
UÀ¼À£ÀÄß PÉÆlÖ £ÀAvÀgÀ E£ÀÆß gÀÆ.5,00,000-00 £À£Àß §½ G½¢vÀÄÛ. CzÀ£ÄÀ ß £Á£ÀÄ
RZÀÄð ªÀiÁrzÉÝãÉ.
Rjâ ªÀiÁvÀÄPÀvÉAiÀÄ PÁ®PÉÌ 6 wAUÀ¼ÉƼÀUÁV ¸ÀA¥ÀÆtð ºÀt PÉÆlÄÖ Rjâ
ªÀiÁrPÉƼÀî¨ÉÃPÉAzÀÄ PÀgÁgÀÄ DVgÀÄvÀÛzÉ. CzÉà ¥ÀæPÁgÀ ¸ÀAZÀUÁgÀ ¥ÀvÀæªÀ£ÀÄß §gÉAiÀįÁ¬ÄvÀÄ.
¸ÀzÀj CªÀ¢üAiÀÄ°è Rjâ ¥ÀvÀæªÀ£ÀÄß £ÉÆÃAzÀÄ ªÀiÁr¹PÉƼÀîzÉà EzÀÝgÉ ¸ÀzÀj PÀgÁgÀÄ
¥ÀvÀæªÀÇ gÀzÁÝUÀÄvÀÛzÉ JAzÀÄ ¤¦-17 gÀ°è §gÉAiÀįÁVgÀÄvÀÛzÉ. ªÀÄvÀÄÛ £ÁªÀÅ PÉÆlÖ
¸ÀAZÀUÁgÀ ºÀtªÀ£ÀÄß AiÀiÁªÀÅzÉà §rØ E®èzÉ ¥ÀgÀvï PÉÆqÀ¨ÉÃPÀÄ JAzÀÄ
§gÉAiÀįÁVgÀÄvÀÛzÉ. Rjâ ªÀåªÀºÁgÀªÀ£ÄÀ ß ªÀiÁqÀĪÀÅzÀQÌAvÀ ¥ÀƪÀðzÀ°è F zÁªÉÃzÀ
D¹ÛUÉ ¸ÀA§AzsÀ¥ÀlÖ PÁUÀzÀUÀ¼À£ÀÄß £Á£ÀÄ £ÉÆÃrgÀĪÉ, zÁªÉÃzÀ d«ÄãÀ£ÀÄß £Á£ÀÄ
£ÉÆÃrzÉÝãÉ. zÁªÉÃzÀ D¹ÛUÉ ¸ÀA§AzsÀ¥ÀlÖAvÉ PÁUÀzÀUÀ¼ÀÄ J®èªÀÇ ¸ÀjAiÀiÁV EzÀݪÀÅ.
(Emphasis Supplied)
26. The admission of Pw-1 extracted above is unambiguous
and categorical of what is stated therein. It is also relevant to note
that Pw-1 is a practicing advocate. Thus, his admission cannot be
equated with an admission of a lay man. Probably it stands on a
higher pedestal. And following can be readily noticed in his
evidence;
(i) that the contract stipulated six months from the date of
contract to pay the entire balance consideration
amount;
(ii) if the amount if not paid within six months, the contract
gets cancelled;
(iii) All title deeds pertaining to the properties agreed to be
sold were in order;
27. On analysis of the evidence, it is forthcoming that
except executing the sale deed on receipt of the balance
consideration amount, nothing else was required to be done by the
defendant/respondent. In other words, the payment of balance
consideration by the plaintiff was not dependent on anything to be
done by the defendant other than execution of sale deed on receipt
of balance amount.
28. Nothing is placed on record to hold that the parties
agreed to relax the condition relating to the time stipulated in the
agreement for sale. Even there is no pleading to this effect.
Though, the principle that time is not the essence of the contract in
a suit for specific performance of immovable property deserves its
consideration in appropriate cases, said principle cannot be applied
as if it is a Statute. The said principle must be applied by
considering the facts and circumstances of each case. In addition to
the aforementioned cross examination of Pw-1, it is relevant to
refer to the following portion of the cross-examination of Pw-1
which is as under:-
DgÀÄ wAUÀ¼ÉƼÀUÁV Rjâ ¥Àvæª
À À£ÄÀ ß ªÀiÁrPÉƼÀî¨ÉÃPÀÄ E®è¢zÀÝgÉ ¥ÀæwªÁ¢UÉ
PÉÆlÖ ºÀt CªÀjUÉ zÀPÁÌUÄÀ vÀÛzÉ J£ÀÄߪÀ PÀgÁjUÉ £Á£ÀÄ ¥ÁªÀgï-D¥ï
CmÁ¤ð£ÁxɬÄAzÀ M¦àPÆ
É ArzÉÝ ªÀÄvÀÄÛ CzÀ£ÄÀ ß ªÁ¢UÉ w½¹zÉ. CªÀgÄÀ
M¦àPÉÆAqÀgÀÄ.
29. The above said evidence also points to the inevitable
conclusion that the time was indeed an essence of the contract.
30. It may not be out of place to mention here that in the
last couple of decades, the value of the immovable properties is
soaring high and that too in a short span of time. The general
principle that the time is not an essence of the contract when it
comes to immovable property, is not a statutory prescription. It is
a principle evolved by Courts on equitable consideration. Indeed,
such equitable consideration had strong justifications in good old
times, where hardly there was any change in the property value for
a considerable length of time. However, many things concerning
real estate have changed beyond comprehension. Perhaps the
general principle that the time is not an essence of the contract
when it comes to immovable property, certainly calls for a relook in
the present-day context. This Court is not saying that the said
principle is obsolete in the present-day context. However, the kind
of laxity shown earlier on the party who took his own sweet time to
approach the court seeking specific performance of contract of
immovable property, probably cannot be applied in the same
measure. Thus, the Courts need to be a bit circumspect while
applying the said principle.
31. If, the terms of the contract stipulate the time frame
for payment of the consideration amount by the purchaser and
nothing was required to be done by the vendor except executing
the sale deed on receipt of the entire consideration amount and
when there is an admission in the cross-examination which would
point to the fact that the time was the essence of the contract, the
principle that the time is not the essence of the contract cannot be
applied to dilute the rigour of the agreement.
32. This Court has also referred to the judgments cited by
the appellant to urge the point that the time is not an essence of
the contract in case of an agreement to sell immovable property.
Those judgments are rendered in the context of agreements and
evidence placed in those cases. Having analysed the agreement for
sale and evidence on record, this Court is of the view that the ratio
in the judgments cited cannot be made applicable to the present
case. On consideration of the terms of the agreement and the
evidence on record, this Court is of the view that the time was
indeed the essence of the contract dated 20.07.2006.
33. The next point that requires consideration is, "whether
the contract dated 20.07.2006 stood cancelled immediately after
the expiry of six months from the date of the agreement".
34. Admittedly, the sale deed is not executed within six
months from the date of the agreement. It is already noticed that
the plaintiff did not pay the balance consideration amount within
six months. It is admitted in the cross-examination by Pw-1 that
non-payment of the balance consideration amount will result in
cancellation of the agreement as per the terms of the agreement.
It is relevant to repeat the relevant portion of the said admission:
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35. This admission on the part of Pw-1 indicates that Pw-1
has admitted that there is a cancellation clause in the agreement in
the event of non-payment of the balance consideration amount.
However, it is to be noticed that an obligation is cast on the vendor
to get the agreement cancelled and to pay the earnest consideration
amount if the balance consideration amount is not paid within six
months. Thus, notwithstanding the admission by Pw-1 which is
extracted above, this Court is of the view that the cancellation of
the agreement is not automatic. The admission in the cross
examination is not always conclusive. If the said admission if read
in the backdrop of what is recited in the agreement, one can
conclude that there must be a formal agreement (either oral or in
writing) canceling the agreement and the same is to be evidenced
by repayment of the consideration amount.
36. It is relevant to note that the defendant has taken a
stand that he has canceled the agreement by orally informing the
plaintiff. However, it is an admitted fact that he has not repaid the
earnest consideration amount which is an obligation cast on the
defendant/respondent in the event of cancellation of the agreement.
Though, this Court is not holding that repayment of the earnest
consideration amount is a condition precedent for cancelling the
agreement, the fact that the amount is not repaid is a factor that
must be taken into consideration.
37. In this view of the matter, particularly in the absence of
any other credible evidence either oral or documentary which
evidences the cancellation of the agreement, the agreement is not
canceled as contended by the defendant. The trial Court erred in
holding that the agreement was revoked.
38. The next point for consideration is, "whether the
plaintiff has proved his readiness and willingness to perform his part
of the contract"?
39. As already held by this Court the time was indeed the
essence of the contract dated 20.07.2006. This Court has also held
that the agreement is not canceled. Merely because the agreement
is not cancelled by the defendant, it ipso facto does not mean that
the time fixed for performance gets extended. For such extension,
there must be an agreement either oral or documentary. No such
agreement extending the time fixed for performance is pleaded.
Hence though the respondent has failed to prove revocation of
agreement, the plaintiff must prove his readiness and willingness to
perform his part of the contract before expiry of the time fixed.
40. As already noticed, except for executing the registered
sale deed on receipt of the balance consideration amount of
Rs.6,51,000/-, nothing was required to be done by the defendant.
Entire obligation to repay the consideration amount was on the
plaintiff and six months was stipulated for the purpose as already
held. The trial Court has concluded that the plaintiff was not ready
and willing to perform his part of the contract.
41. On behalf of the appellant, it is sought to be urged that
the financial capacity of the plaintiff to pay Rs.6,51,000/- was never
doubted by the defendant as such, it is to be presumed that the
plaintiff was ever ready to perform his part of the contract. It is the
well-settled position of law that readiness and willingness are to be
established from the date of the agreement till the date of the
execution of the final part of the contract.
42. Though, the PW-1 in his evidence has stated that the
plaintiff was always ready and willing to perform his part of the
contract, the plaintiff did not take any steps from 20.07.2006 (date
of agreement) to 31.08.2007 (date of notice) for getting the sale
deed executed. The PW-1 in his evidence has admitted that he had
spent Rs.5,00,000/- which was allegedly paid by the plaintiff. This is
one of the factors that would demonstrate that the Pw-1 who was
supposed to complete the transaction on behalf of the plaintiff was
not having requisite balance consideration amount. It is not his
case that alternate arrangement for money was made to complete
the sale transaction.
43. Though the defendant in the cross-examination has
admitted that the plaintiff is wealthy, that by itself is not sufficient
to hold that the plaintiff was ready to perform his part of the
contract. The financial soundness at the most signifies the readiness
but not necessarily the willingness. Under Section 16(c) of the
Specific Relief Act, 1963 both "readiness" and "willingness" have a
different connotation and flavor. Mere processing the money to
meet the obligation to pay the balance consideration amount by
itself does not prove willingness. At the most, the plaintiff in such a
situation will be signifying his readiness. The willingness
contemplated under Section 16(c) of the Specific Relief Act, 1963
requires something more than just being ready with the balance
consideration amount. For this reason, this Court is of the view that
though a passbook in the name of plaintiff's wife is produced to
show that Rs.8,00,000/- was available in the account of plaintiff's
wife, that itself is not enough to hold that the plaintiff was ready
and willing to perform his part of the contract.
44. In this background, if the evidence is analysed it is
forthcoming that the plaintiff did not issue any notice to the
defendant within six months from the date of execution of the
agreement for sale dated 20.07.2006. It is also forthcoming that no
steps are taken immediately after the expiry of the six months
contemplated under the agreement dated 20.07.2006. The records
indicate that only on 31st August 2007, the plaintiff issued the
notice to the defendant calling upon him to execute the sale deed.
45. The PW-1 has produced two documents namely the
letters allegedly sent to the defendant under Certificate of Posting
asking the defendant to execute the Sale Deed. The alleged letters
are undated. Though, it is urged that the letters have dispatched in
the month of January and April, 2007, those documents do not
inspire confidence as no reference is made to the said notices either
in the plaint, or in the notice issued by the Advocate for the
plaintiff.
46. There is one more reason to suspect the said notices
said to have been issued in January and April 2007. The notices
marked at Ex.P4 and P6 both dated 31.08.2007 do not tally with
each other. In one notice marked at Ex.P4, which is the office copy
of the advocate who sent the notice, an additional recital "My client
has kept the balance amount ready and he is always ready and
willing to perform his part of the contract" is found. The cursory
perusal of above extracted line in Ex.P4 reveals that it is an
interpolation. The font and the color of the ink of the interpolated
line is distinctly different from the rest of the contents.
Surprisingly, said sentence is not found in the notice dated
31.08.2007 marked at Ex.P6 which is allegedly sent to the
defendant.
47. Lack of credible evidence relating to any positive steps
by the plaintiff, from the date of agreement till the expiry of six
months contemplated in the agreement, and inaction on the part of
the plaintiff close to six months after the expiry of six months
contemplated in the agreement to institute the suit, or to have
extension of time, would make the Court lean in favour of the
finding of the trial Court which on appreciation of evidence, (and
which of course had the benefit of observing the demeanor of the
parties) has concluded that the plaintiff failed to prove readiness
and willingness to perform his part of the contract. For the reasons
recorded, this Court is of the view that the finding on issue No.2
must be upheld.
48. Now the Court has to consider whether the
plaintiff/appellant is entitled to the relief other than the specific
performance of the contract.
49. The plaintiff claimed relief for specific performance of
the contract dated 20.07.2006 as a main prayer.
50. In the alternative, the plaintiff has sought for a refund
of Rs.11,51,000/- along with interest @ 15% per annum which
includes Rs.5,00,000/- the advance consideration amount and
Rs.6,51,000/- the balance payable. The prayer for a refund of
Rs.6,51,000/- as compensation probably stems from the premise
that the plaintiff is deprived of the value of the said value which he
would have acquired had there been a sale.
51. As already noticed, the trial Court granted a decree for
refund of the earnest amount paid along with 6% interest. The
prayer to award compensation of Rs.6,51,000/- is rejected. At the
same time, the prayer to award 15% interest is declined in part and
interest @ 6% is awarded from the date of the suit till the
realisation of the amount.
52. On going through the appeal memo, it is noticed that
the plaintiff has only questioned the decree declining specific
performance of the contract and is not challenging the part of the
decree for awarding compensation of Rs.6,51,000/- and part of the
interest which is declined. Thus, it is urged by the learned Senior
counsel that the Court can only consider the appeal as one claiming
specific performance of contract and there is no prayer for
considering the claim for awarding compensation as the decree
rejecting compensation is not questioned and has attained finality.
53. On going through the appeal memo, it is seen that the
plaintiff/appellant is questioning the decree rejecting specific
performance and there is no challenge to the part of the decree
rejecting the alternative prayer for awarding compensation.
However, it is to be noticed that the prayer in the plaint is to grant
a decree for a specific performance, and in the alternative, the
prayer is to pass a decree for a refund of the earnest amount and
the compensation.
54. This Court is of the view the relief of specific
performance of contract is a larger relief and a prayer for refund of
earnest amount and damages is a lesser relief. Without sticking the
technicalities of the pleading in appeal memorandum, this Court is
of the view in the facts of the case, the alternative prayer in the
plaint can be read in the appeal. The court fee paid on the main
prayer and alternative prayer is the same. In addition, more than
anything else, in the written submission dated 30.01.2024 filed by
the respondents, it is indicated that the respondents are willing to
pay a reasonable compensation, if awarded by the Court.
55. The agreement for sale is in respect of land measuring 2
acres and 27 guntas. The boundaries of the properties indicate that
the land is adjacent to a national highway. This Court can certainly
take judicial note of the fact that there is a considerable escalation
in the value of the land. It is also relevant to note from a recital in
the agreement for sale, the plaintiff came forward to purchase the
property from the defendant who needed money and received
Rs.5,00,000/- in advance. That payment must have provided some
sort of succor to the defendant who was in dire need of money.
56. This Court should also bear in mind that the trial Court
has awarded 6% interest on the consideration amount of
Rs.5,00,000/- which if calculated comes approximately to
Rs.4,87,500/-. The defendant has not questioned the decree for
refund of earnest amount and also the interest awarded on it.
57. The plaintiff has claimed damages of Rs.6,51,000/-
which according to him is the balance payable on the sale
agreement. Since the Court has concluded that the time was the
essence of the contract and the plaintiff did not prove readiness and
willingness to perform the contract, there cannot be a decree for
compensation of Rs.6,51,000/- as claimed. Since this Court is
awarding the compensation despite the plaintiff not performing his
part of the contract, and it is primarily based on the concession by
the respondents who left to the discretion of the Court to award a
reasonable compensation, this Court is of the view that interest of
justice will be met if 60% of the compensation amount of
Rs.6,51,000/- claimed i.e., Rs.3,90,600/- which is rounded off to
Rs.4,00,000/- is awarded with 7% interest per annum from the date
of the suit till realisation of the amount. Thus, the
plaintiff/appellant is entitled to Rs.5,00,000/- towards refund of
earnest amount and Rs.4,00,000/- towards compensation, and with
7% interest per annum on Rs.9 lakhs from the date of the suit till
realisation.
58. In the peculiar circumstances of the case, the costs are
made easy.
59. Hence the following:
ORDER
(i) Appeal is allowed in part.
(ii) The judgment and decree dated 26.08.2014 in
O.S.No.406/2007 on the file of Principal Senior Civil
Judge, Hubballi is modified.
(iii) The plaintiff/appellant is entitled to refund of earnest
amount of Rs.5 lakhs and compensation of
Rs.4 lakhs along with interest @ 7% per annum on
Rs.9 lakhs from the date of the suit till realisation.
(iv) The respondents shall pay the amount decreed,
within three months from this date.
Sd/-
JUDGE
BRN/CHS/GVP
