Karnataka High Court
Shankari Pandiyan vs Ramachandra Murthy on 12 January, 2024
RFA No.160/2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JANUARY, 2024
PRESENT
THE HON'BLE MRS. JUSTICE K.S. MUDAGAL
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
REGULAR FIRST APPEAL No.160/2012 (SP)
BETWEEN:
1. SHANKARI PANDIYAN,
W/O SOUNDARA PANDIYAN N.C.,
AGED ABOUT 53 YEARS,
R/AT FLAT NO 15,
MATHRU PRASAD, LOTTEGOLLAHALLI,
RMV II STAGE,
BANGALORE-560 094.
...APPELLANT
(BY SRI ANIL KUMAR SHETTY, ADVOCATE)
AND:
1. RAMACHANDRA MURTHY,
SINCE DEAD BY HIS LR
(a) DR. UMAVATHY R.,
D/O LATE RAMACHANDRA MURTHY,
AGED 36 YEARS,
(b) DR. LAKSHMIKUMARI,
D/O LATE RAMACHANDRA MURTHY,
AGED 34 YEARS,
RFA No.160/2012
2
(c) DR. NETHRAVATHY,
D/O LATE RAMACHANDRA MURTHY,
AGED 30 YEARS,
(a) TO (c) ARE R/AT NO 971/5,
15TH 'A' CROSS, 'A' SECTOR,
YELAHANKA NEW TOWN,
BANGALORE 560 064.
2. P. VIMALA VASANTHAKUMARI,
W/O K. RAMACHANDRA MURTHY,
AGED 55 YEARS,
R/AT NO 1188, HIG, 9TH 'D' CROSS,
YELAHANKA NEW TOWN,
BANGALORE 560 064.
...RESPONDENTS
(BY SRI KEMPANNA, ADVOCATE FOR
R1(a) & (c) AND R2;
R1(b) SERVED)
THIS REGULAR FIRST APPEAL IS FILED UNDER
SECTION 96 OF CPC, PRAYING TO SET ASIDE THE
JUDGMENT AND DECREE DATED 30.09.2011 PASSED IN
O.S.10316/2006 ON THE FILE OF THE XI ADDITIONAL
CITY CIVIL JUDGE, BANGALORE CITY (C.C.H.No.8),
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD
AND RESERVED FOR JUDGMENT ON 16.11.2023, THIS DAY
K.V. ARAVIND J., PRONOUNCED THE FOLLOWING:
RFA No.160/2012
3
JUDGMENT
The present appeal is by the defendant challenging
the judgment and decree dated 30.09.2011 in
O.S.No.10316/2006 passed by the XI Additional City Civil
Judge, Bangalore City, decreeing the suit for specific
performance of agreement of sale.
2. For the purpose of convenience, parties are referred
to as per their ranks in the original suit.
3. Brief facts of the case are:-
The subject matter of suit is, property bearing No.29
(Old No.226, 227 and 228), II Main Road,
Sheshadripuram, Bengaluru, (hereinafter referred as 'suit
schedule property' for short). Defendant is the absolute
owner of the suit schedule property. Plaintiff Nos.1 and 2
entered into agreement of sale dated 13.05.2005 (Ex.P.1)
regarding the suit property with the defendant. In terms
of the agreement, total sale consideration agreed is
Rs.24,50,000/-. As on the date of agreement, plaintiffs
have paid a sum of Rs.12,00,000/- as advance, out of
which, Rs.2,00,000/- by way of cash, Rs.1,00,000/- by
Cheque bearing No.736426, dated 03.05.2005 and a sum
of Rs.9,00,000/- by Cheque bearing No.736427, dated
13.05.2005. Both cheques were drawn on Bank of India,
Margosa Road, Bengaluru. The plaintiffs paid a further
sum of Rs.2,40,000/- on 21.12.2005 at the request of the
defendant. The plaintiffs have paid property tax of
Rs.1,03,688/- on behalf of the defendant. The balance
sale consideration of Rs.9,06,312/- was agreed to be paid
at the time of registration of the sale deed. The agreed
time for execution of sale deed was 45 days from the date
execution of agreement of sale. In terms of the
agreement, sale of the schedule property shall be free
from all encumbrances, attachments, court or acquisition
proceedings or charges of any kind.
4. The defendant issued legal notice Ex.P4 dated
14.10.2006 terminating the agreement of sale due to
failure on the part of the plaintiffs to pay the balance
consideration and get the sale deed registered in their
favour. The plaintiffs issued reply notice dated 30.10.2006
Ex.P.5 stating that the plaintiffs were always ready and
willing to perform their part of contract and called upon the
defendant to receive the balance consideration and
execute the sale deed.
5. The defendant on summons being issued appeared
and filed written statement denying the plaint averments
that agreement of sale was executed on receipt of advance
consideration of Rs.12,00,000/-. The sale deed was to be
registered within 45 days from the date of agreement of
sale, time was essence of the contract. In view of failure
on the part of the plaintiffs to get the sale deed registered
by paying the balance sale consideration, defendant
requested the plaintiffs to return the original title deeds
and take back the advance consideration. At that point of
time, plaintiffs requested the defendant to grant some
more time and paid further advance amount of
Rs.2,40,000/- with an assurance that they would get the
sale deed registered before March 2006 by paying the
balance consideration amount. It was alleged that even
after lapse of six months from the date of their further
assurance, plaintiffs failed to get the sale deed registered
in their favour by paying the balance consideration. The
defendant left with no other alternative, issued notice
terminating the agreement of sale dated 13.05.2005 and
calling upon the plaintiffs to return all original title deeds
and to collect an amount of Rs.10,80,000/- after deducting
25% of the advance amount towards damages.
6. The defendant contends that there were tenants in
the building and she agreed to sell the schedule property
at a lower price than the market value on the plaintiffs
undertaking the responsibility of evicting the tenants. Had
the defendant paid the balance consideration within the
agreed time, she could have discharged her Company's
(M/s. Hidden Hotels Private Limited) loan under One Time
Settlement scheme of the Karnataka State Finance
Corporation by the sale proceeds of the schedule property.
In view of failure of the plaintiffs to perform their part of
the contract by paying the remaining consideration within
the agreed time, defendant was compelled to sell another
property to clear the loan of her Company with KSFC. It is
the plaintiffs who were not ready and willing to get the
sale deed registered by paying the balance consideration.
Thus, defendant sought dismissal of the suit.
7. The Trial Court on the aforesaid pleadings framed
the following issues;
i) Whether the plaintiffs prove that the
defendant has agreed to sell the
schedule property for consideration of
Rs.24,50,000/- and by receiving an
advance amount of Rs.12,00,000/- as
entered into an agreement of sale on
13.06.2005?
ii) Whether the plaintiffs prove that they
were and are always ready and willing to
perform their part of the contract?
iii) Whether the time is essence of the
contract?
iv) Whether the defendant proves that due
to the non-compliance of the agreement
of sale, she has terminated the
agreement as alleged in para No.7 of the
written statement?
v) Whether the plaintiffs are entitled for the
relief of specific performance of the sale
agreement?
vi) What decree or order?
8. Plaintiff No.1 got examined himself as PW.1 and
one Sri Deepak H. Mamtura witness to Ex.P1 was
examined as PW.2. Plaintiffs got marked Exs.P.1 to P.19
as their documentary evidence. The defendant examined
herself as DW.1 and got marked Exs.D.1 to D.14 as
documentary evidence in support of her case.
9. The Trial Court on hearing the parties and
considering the oral and documentary evidence proceeded
to hold that plaintiffs have proved that defendant has
agreed to sell the schedule property in their favour for
consideration of Rs.24,50,000/- and receiving advance
consideration of Rs.12,00,000/- executed agreement of
sale on 13.05.2005. The Trial Court further held that
plaintiffs were always ready and willing to perform their
part of the contract. Insofar as issue No.3, in view of
receipt of an advance of Rs.2,40,000/- on 21.12.2005,
much after the expiry of stipulated time of 45 days, held
that time was not essence of the contract. Insofar as issue
No.4 regarding termination of agreement, Trial Court held
that as plaintiffs were always ready and willing to perform
their part of the contract and time was not essence of
contract, the defendant cannot cancel the agreement
unilaterally by issuing legal notice dated 14.10.2006.
10. The Trial Court proceeded to hold that plaintiffs are
entitled for the relief of specific performance of sale
agreement and decreed the suit directing the plaintiffs to
deposit balance consideration of Rs.9,06,312/- in the Court
within two months from the date of the order and directed
the defendant to execute registered sale deed conveying
the suit schedule property in terms of agreement of sale
Ex.P.1 within one month from the date of deposit of
balance consideration amount in the Court by the plaintiffs.
The plaintiffs were granted liberty to get their sale deed
registered through process of Court in the event of failure
on the part of the defendant to comply with the direction
to execute the registered sale deed. The defendant is
declared to be entitled for balance consideration of
Rs.9,06,312/-, which would be deposited by the plaintiff.
11. The defendant/appellant being aggrieved by the
above judgment and decree has preferred this appeal.
12. Submissions of Sri Anil Kumar Shetty, learned
counsel for the appellant;
i) There is no dispute regarding execution of sale
agreement and terms of the agreement. Payment of
further advance of Rs.2,40,000/- is also admitted, whereas
disputed the other payments said to have been incurred by
the defendant by way of property tax.
ii) The agreement of sale with stipulation of period of
45 days to complete the transaction was entered into for
the purpose of clearing the loan raised by the defendant's
Company from KSFC. As the intention of sale was to clear
One Time Settlement offered by KSFC, time being essence
of contract has to be gathered from the surrounding
circumstances. The plaintiffs had no intention to purchase
the property for themselves. To clear the loan, defendant
had to sell other property which is subject matter of
Ex.D.14. The second property at Ex.D.14 was sold for the
purpose of repayment of loan and Ex.D.9 would evidence
repayment of loan to KSFC. The extension of time, if any
was only upto 31.03.2006. The plaintiffs were not ready
and willing to perform their part of the contract till the
legal notice Ex.P.4 was issued by the defendant
terminating the agreement to sell dated 13.05.2005.
iii) There was no offer or communication made by the
plaintiffs to perform their part of the contract in relation to
Ex.P.1. The Trial Court has not recorded any reasons
supporting the finding on the sufficiency and availability of
funds during 45 days of the contract period. Readiness
can only be proved by demonstrating the availability of
funds. Exs.P.17 to P.19, Bank Passbooks of plaintiffs do
not disclose availability of funds during 45 days of the
agreement. The agreement to sell at Ex.P.1 has been
terminated through legal notice dated 14.10.2006 Ex.P.4.
Without seeking declaration to nullify Ex.P.4, the suit was
not maintainable.
iv) The contention of the plaintiffs that in view of
existence of tenants in the schedule property, which was
an impediment to execute the sale deed and lead to
impossibility of performance as contended by the plaintiffs
is incorrect as they were statutory tenants. PW.1 has
clearly admitted that handing over vacant possession was
not the condition in the sale agreement. Therefore, the
decree for specific performance is unsustainable. The
appeal deserves to be allowed and suit shall be dismissed.
13. In support of his contentions, learned counsel placed
reliance on the following judgments;
i) I.S. Sikandar (D) by LRs. Vs. K. Subramani
and others in (2013) 15 SCC 27.
ii) C. Haridasan vs. Anappath Parakkattu
Vasudeva Kurup and others in Civil Appeal
No.4072 of 2022 (Arising out of SLP (C)
No.2567 of 2022).
iii) Desh Raj and others vs. Rohtash Singh in
AIR 2023 SC 163.
iv) Chand Rani (Dead) by LRs. vs. Kamal Rani
(Dead) by LRs. in AIR 1993 SC 1742.
v) K. Karuppuraj vs. M. Ganesan in AIR 2021
SC 4652.
vi) Her Highness Maharani Shantidevi P.
Gaikwad vs. Savjibai Haribai Patel and
others in AIR 2001 SC 1462.
vii) Rajasthan Breweries Ltd. vs. The Stroh
Brewery Company in AIR 2000 Delhi 450.
14. Submissions of Sri Kempanna, learned counsel
for respondent Nos.1(a) and (c);
i) The defendant has nowhere stated in the pleading
that agreement of sale was to clear the loan. It is only
during evidence, by way of amendment of the written
statement, the theory of sale agreement to clear the loan
was introduced. The loan was only Rs.4,00,000/- and the
loan was not availed by the defendant. No hardship has
been caused to the defendant. Exs.P.17 to P.19, Bank
Passbooks would demonstrate availability of remaining
consideration to be payable to the defendant to get the
sale deed executed, which would demonstrate readiness
and willingness on the part of the plaintiffs.
ii) By accepting further consideration of Rs.2,40,000/-
on 21.12.2005, time was extended for completion of the
sale till 31.03.2006. At the request of the defendant,
plaintiffs have paid property tax of the schedule property.
The tax paid receipt at Ex.P.2 would show plaintiff No.1 as
payer of the tax. Electricity Bills also have been paid to an
extent of Rs.9,927/- as per Exs.P.7 to P.12.
iii) The intention of defendant to sell the schedule
property can be gathered from Clause (6) of Ex.P.1, which
would disprove the theory of sale for repayment of loan
through One Time Settlement canvassed by the defendant.
As per Clause (6) of Ex.P.1, execution of the sale deed had
to take place only after the schedule property is free from
all encumbrances, attachments, court or acquisition
proceedings or charges of any kind. The schedule property
was occupied by tenants, HRC cases were pending and
pendency of HRC cases between the defendant and the
tenants was not disclosed to the plaintiffs.
iv) As the recitals in sale agreement Ex.P.1 and in sale
deed Ex.D.14, the intention of sale agreement was not for
the purpose of repayment of loan to KSFC. PW.1 in her
cross-examination has clearly admitted that on receipt of
Rs.2,40,000/- on 21.12.2005, period of agreement to sell
was extended till end of March 2006. No forfeiture clause
in the agreement and hence, defendant is not entitled to
forfeit any part of advance consideration.
15. In support of his submissions, learned counsel for
the respondents placed reliance on the following
judgments;
i) Basavaraj vs. Padmavathi and another in
AIR 2023 SC 282.
ii) P. Ramasubamma vs. V. Vijayalakshmi
and others in (2022) 7 SCC 384.
iii) P. Daivasigamani vs. S. Sambandan in
AIR 2022 SC 5009.
iv) Shri Pandurang vs. Shri Ravi in
RFA No.100230/2017, DD 08.05.2020.
16. On hearing the parties and on examination of
records, the points that arise for our consideration are;
i) Whether the plaintiffs prove that they
were ready and willing to perform their
part of the contract?
ii) Whether time was the essence of the
contract?
iii) Whether termination of agreement by the
defendant is justified and without seeking
declaration regarding termination, suit is
maintainable?
Re. Point No.1
17. The plaintiffs in the plaint have categorically pleaded
that total consideration agreed was Rs.24,50,000/-,
defendant received advance amount of Rs.12,00,000/- i.e.
Rs.2,00,000/- by way of cash and Rs.1,00,000/- and
Rs.9,00,000/- by way of cheques. The agreement is dated
13.05.2005. The time agreed to execute the sale deed is
45 days from the date of agreement subject to compliance
of other conditions by the defendant. The defendant has
received a further sum of Rs.2,40,000/- on 21.12.2005
and extended the agreement time till March 2006. In
addition to the advance consideration, plaintiffs have paid
a sum of Rs.1,03,688/- as property tax and Rs.9,927/-
towards electricity charges relating to the schedule
property. The balance consideration payable was
Rs.9,06,312/-. The plaintiffs had sufficient source to make
the payment. The defendant has not disputed execution of
agreement and receipt of consideration of Rs.12,50,000/-
and Rs.2,40,000/-. The defendant has alternatively
pleaded that, even if the additional advance consideration
of Rs.2,40,000/- was received on 21.12.2005 and
extended the agreement till end of March 2006, in view of
plaintiffs having not registered the sale deed before March
2006, plaintiffs are not entitled for specific performance as
their readiness and willingness was not proved.
18. Section 16 of the Specific Relief Act, 1963,
(hereinafter referred to as 'S.R. Act' for short) as it stood
during relevant time, imposes conditions for relief of
specific performance. Section 16 reads as under:
"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."
19. The sale agreement is dated 13.05.2005. Hence,
Section 16 of S.R. Act as existed prior to amendment is
applicable, as extracted above. In compliance of the
conditions of Section 16(c) read with Explanation to the
said Clause, the plaintiffs have proved that they were
always ready and willing to perform the essential terms of
the contract which are to be performed by them. The
plaintiffs have proved the availability of funds to pay the
remaining consideration in performance of the contract.
20. The contention of defendant that plaintiffs have to
prove availability of funds within the time limit of 45 days
of the agreement is not acceptable for the reason that in
view of receipt of further advance of Rs.2,40,000/- on
21.12.2005 much after expiry of 45 days as stipulated in
the agreement Ex.P.1, the time limit of 45 days has been
waived. Further, in cross-examination, DW.1 has
specifically accepted that on receipt of further advance
consideration of Rs.2,40,000/-, the time limit was
extended till March 2006. In the examination-in-chief, the
defendant has specifically made an averment that the
period to execute the sale deed was extended till March
2006. In view of receipt of Rs.2,40,000/- on 21.12.2005
and agreement to extend the time provided in Ex.P.1
would establish that plaintiffs were ready and willing to
perform their part of the contract.
21. The Hon'ble Supreme Court in the case of Govind
Prasad Chaturvedi vs. Hari Dutt Shastri and another
in (1977) 2 SCC 539 has held as under;
" It is settled law that the fixation of period within
which the contract has to be performed does not
make the stipulation as to time the essence of the
contract. When a contract relates to sale of
immovable property, it will normally be presumed
that time is the essence of the contract. It may
also be mentioned that the language used in the
agreement is not such as to indicate in
unmistakable terms that the time is of the essence
of the contract. The intention to treat time as the
essence of the contract may be evidenced by
circumstances which are sufficiently strong to
displace the normal presumption that in a contract
of sale of land stipulation as to time is not the
essence of the contract."
22. The Hon'ble Supreme Court in the case of M/s. Hind
Construction Contractors by its Sole Proprietor
Bhikam Chand Mulchand Jai (Dead) by LRs vs. State
of Maharashtra in (1972) 2 SCC 70, has held that when
the parties to the contract have stipulated time to
complete the agreement and if the same is extended and
on extension of the said stipulated period by the parties to
the contract, such clause has to be construed as rendering
ineffective the express provisions relating to the time being
essence of the contract. In the present case, even if the
stipulation of 45 days to complete the transactions is
considered as time being the essence of the contract, in
view of subsequent extension by the defendant on
acceptance of additional advance, the stipulated period
gets waived and is to be held that 45 days was never
intended by the parties to be of the essence of the
contract.
23. Applying the above principle to the facts of the
present case, though Ex.P.1 agreement stipulated 45 days
to complete the transaction, the defendant on receipt of
further advance consideration on 21.12.2005 extending
the period till March 2006 would show that the time was
not the essence of the contract and that rendered the
clause regarding stipulation of time ineffective.
24. It is the specific plea of the plaintiffs that Ex.P.1
mandates the defendant/vendor to make the schedule
property free from all encumbrances, attachments, court
or acquisition proceedings or charges of any kind. DW.1 in
her cross-examination has accepted pendency of HRC
proceedings. That goes to show that defendant had not
performed her part of contract namely clearing the suit
schedule property from court proceedings. Therefore, the
defendant's contention that plaintiffs failed to prove their
readiness and willingness deserves no merit.
25. Ex.P.17 - Passbook of Bank of India and Ex.P.19 -
Passbook of Canara Bank of plaintiff No.1 and Ex.P.18 -
Passbook of plaintiff No.2 would clearly establish that not
only during the period of 45 days of agreement and also
during extension of time till March 2006, sufficient funds to
make payment of balance consideration of Rs.9,06,312/-
was available. Further, the transactions as reflected in
Exs.P.17 to P.19 would clearly establish that plaintiffs had
sufficient source for making payment of remaining
consideration.
26. In view of Explanation (i) to Clause (c) to Section 16
of S.R. Act, the plaintiffs need not actually deposit the
money with the defendant or before the Court. Hence, it
has to be accepted that plaintiffs were ready and willing to
perform their part of the contract. As recorded by the Trial
Court, pending litigation with the tenants of schedule
property was the reason for delay in execution of sale deed
on the part of the defendant.
27. The defendant's specific contention that till notice at
Ex.P.4 terminating the agreement to sell Ex.P.1 was
issued, there was no attempt made by the plaintiffs to get
the sale deed registered, is also not acceptable. In view of
Clause (6) of Ex.P.1, it was the obligation on the part of
the defendant to make the schedule property free from
court proceedings.
28. Further contention of the defendant that even as on
the date of suit, schedule property was occupied by
tenants, circumstances has not changed compared to the
period of agreement, existence of tenants was not
hindrance or impediment for execution of sale deed, is also
not correct and cannot be accepted. Though Ex.P.1 does
not contemplate handing over of vacant possession, Clause
(6) of Ex.P.1 mandates making schedule property free
from court proceedings. It is by virtue of notice issued on
14.10.2006 Ex.P.4 expressing the intention of defendant
not to perform her part of the contract, plaintiffs were
constrained to seek specific performance of the contract by
filing the suit. Total consideration agreed as per Ex.P.1 is
Rs.24,50,000/-. By the date of termination of agreement
and much before filing of suit, plaintiffs had paid
Rs.15,43,688/-, which is substantial portion of
consideration. Plaintiffs have proved through Exs.P.17 to
P.19 regarding availability of funds.
29. Learned counsel for the appellant relied on the
judgment of Hon'ble Supreme Court in the case of
C.Haridasan (supra), to contend that even though there
was an impediment by way of tenants occupying the
schedule property and disputes pending before the Court,
there was no impediment for the plaintiffs to deposit the
remaining consideration to demonstrate their readiness
and willingness and no steps were taken to execute the
sale deed by the plaintiffs. The Hon'ble Supreme Court
observed that plaintiff therein had merely paid 4% of the
consideration, no efforts were made to get the sale deed
executed, no steps were taken to perform his part of the
contract, no notice was issued and no explanation offered
for the delay in getting the sale deed executed. In such
circumstances, the Hon'ble Supreme Court held that the
plaintiff is not entitled for specific performance in terms of
Section 16 (c) of S.R. Act.
Whereas in the present case, the total consideration
agreed is Rs.24,50,000/- and Rs.12,50,000/- was paid at
the time of the agreement, further advance consideration
of Rs.2,40,000/- was paid on 21.12.2005, a sum of
Rs.1,03,688/- was paid as property tax on behalf of the
defendant, in all, a sum of Rs.15,93,688/-. The
consideration due was only Rs.9,06,312/-. As substantial
amounts was already paid and the plaintiffs proved
availability of remaining consideration by Exs.P.17 to P.19,
the above judgment is not applicable to the facts of the
present case.
30. Learned counsel for the respondents has placed
reliance on the judgments of the Hon'ble Supreme Court in
the case of Basavaraj v. Padmavathi and another and
P. Ramasubbamma vs. V. Vijayalakshmi and others
referred to supra, to contend that substantial consideration
has been paid and availability of funds have been proved.
Hence, the plaintiffs were always ready and willing to
perform their part of the contract. The above judgments
are aptly applicable to the facts of the present case and
advance the plaintiffs' case.
31. In view of the above discussion, we hold that
plaintiffs were always ready and willing to perform their
part of the contract. Point No.1 is answered accordingly.
Re. Point No.2.
32. The defendant contends that she agreed to sell the
property to clear the loan borrowed by her Company
namely, M/s. Hidden Hotels Private Limited from KSFC,
this period of 45 days was agreed to complete the sale.
Thereby, time was essence of the contract. Whereas, the
defendant has received a sum of Rs.2,40,000/- on
21.12.2005 and an endorsement has been made in Ex.P.1
accepting receipt of Rs.2,40,000/- after expiry of 45 days
of the time agreed under agreement of sale. DW.1 in her
written statement has admitted acceptance of the request
made by the plaintiffs to extend the time and acceptance
of further advance of Rs.2,40,000/- by extending the time
till March 2006. Contrary to the extension of time till
March 2006, the defendant has contended that time was
the essence of contract. The receipt of additional advance
of Rs.2,40,000/- on 21.12.2005 and extension of time till
March 2006 has also been accepted by the defendant in
her affidavit evidence and cross-examination. It is further
agreed that there was no written agreement/endorsement
for extension of time. It is further admitted in the cross-
examination that in the event of default by either of the
parties, they are entitled to seek damages.
33. In view of the law laid down by the Hon'ble Supreme
Court in the cases of Govind Prasad Chaurvedi and
M/s. Hind Construction Contractors (supra), the facts
and circumstances and conduct of the parties would not
displace the presumption that when contract relates to sale
of immovable property, time is not the essence of the
contract.
34. The specific admissions made regarding acceptance
of additional advance of Rs.2,40,000/- and making
endorsement to that effect on Ex.P.1 and specific
admission of the defendant in her cross-examination
regarding the extension of agreement period till March
2006, would clearly establish that parties to the contract
never intended or agreed to that time was essence of the
contract.
35. Further admission of the defendant that there was no
written agreement/endorsement regarding extension of
time, which is made much after expiry of 45 days agreed
in Ex.P.1 would also clearly establish that time was not
essence of the contract. Ex.P.1 is dated 13.05.2005, 45
days would expire on 28.06.2005. After expiry of six
months from the end of 45 days, defendant has accepted
additional advance of Rs.2,40,000/- on 21.12.2005,
agreed and extended the contract till March 2006. In view
of the aforesaid facts and the judgments of Hon'ble
Supreme Court in the cases of Govind Prasad Chaurvedi
and M/s. Hind Construction Contractors (supra), it has
to be held that time was not the essence of the contract.
36. It is settled position of law that in the case of sale of
immovable property, there is no presumption as to time
being the essence of contract. Even if it is not the essence
of contract, Court may infer that it has to be performed in
a reasonable time by considering the express terms of
contract, nature of the property and surrounding
circumstances. In view of evidence of DW.1 accepting
additional advance and extending time, recitals of Ex.P.1
and Ex.D.14 would not indicate that purpose of sale was to
clear the liability under One Time Settlement with KSFC.
Clause (6) of Ex.P.1 mandates property shall be conveyed
free from court proceedings. As admitted by DW.1,
proceedings at the instance of tenants were pending in the
Court. Considering the above circumstances, when default
in performing the obligations are attributable to the
defendant, it cannot be held that time was essence of the
contract to deny relief to the plaintiffs/purchasers.
37. Ex.P.14 was relied on by the defendant to contend
that plaintiffs' failure to get the sale deed executed
compelled the defendant to sell another property in order
to repay the loan to KSFC under One Time Settlement and
purpose of Ex.P.1 is frustrated. Ex.D.6 letter dated
16.01.2006 by KSFC in favour of defendant, Ex.D.7 letter
dated 02.02.2006 by defendant to KSFC, Ex.D.8 letter
dated 22.03.2006 by KSFC to defendant, Ex.D.9 letter
dated 27.04.2006 by defendant to KSFC, Exs.D.10 and
D.11 demand drafts, Ex.D.12 receipt by KSFC and Ex.D.13
letter by KSFC intimating closure of loan though have
proximity to Ex.D.14 Sale deed, the averments in Ex.D.14
would not indicate or prove that property under Ex.D.14
was sold only for the purpose of repayment of loan and
such sale necessitated due to failure of the plaintiffs to
complete the contract in terms of Ex.P.1. Therefore, such
contention cannot be accepted.
38. Learned counsel for the appellant has placed reliance
on the judgment of the Hon'ble Supreme Court in the case
of Desh Raj (supra) to contend that, in view of time
stipulated under the agreement to complete the
transaction, time is essence of the contract. The above
judgment is not applicable to the facts of the present case.
The Hon'ble Supreme Court has only recorded a finding
that though specific contention has been raised regarding
time bound performance being an essence of the contract,
the Courts below have failed to render any finding on that
aspect. In the present case, though parties have agreed
to perform the contract within a period of 45 days, subject
to compliance of other conditions, defendant has extended
the time on receipt of further consideration of
Rs.2,40,000/- on 21.12.2005. Thus, the understanding of
the parties to the agreement would substantiate that time
was not essence of the contract.
39. Learned counsel for the appellant has further placed
reliance on the judgment of Hon'ble Supreme Court in the
case of Chand Rani (supra), to contend that even if time
is not essence of the contract, Court has to infer that it has
to be performed within a reasonable time by considering
the express terms of the contract, nature of the property
and surrounding circumstances. The above judgment is
not applicable to the facts of the present case in view of
the express terms of the contract and conduct of the
parties in extending the period of compliance of the
contract and nature of the property which is occupied by
the tenants, agreement between the parties for handing
over the said property free from court proceedings. The
defendant contended that the purpose of sale of the
property was to clear loan with KSFC. However, the sale
agreement does not refer to the said purpose. Further,
the loan was not in relation to the defendant, but in
respect of the Company allegedly owned by her.
40. In view of the above discussion, we are of the view
that Trial Court has rightly arrived at the conclusion that
time was not essence of the contract.
Re. Point No.3.
41. It is the specific contention of the defendant that
since plaintiffs failed to perform their part of contract in
time bound manner, the agreement of sale dated
13.05.2005 has been duly terminated by notice dated
14.10.2006, without seeking declaration regarding validity
of the same, the suit is not maintainable.
42. Ex.P.1 Clause(4) refers to completion of execution of
sale deed within 45 days from the date of agreement i.e.
13.05.2005. However, the defendant on 21.12.2005 has
received an additional consideration of Rs.2,40,000/-. In
the written statement, affidavit evidence and in her cross-
examination defendant has admitted that in view of receipt
of further advance of Rs.2,40,000/-, the period for
execution of the sale deed has been extended till March
2006. The defendant has admitted that disputes by the
tenants are pending before the Court. In view of the
above admissions, it is clear that the schedule property is
not free from court proceedings as has been agreed in
Ex.P.1 at Clause (6).
43. The plaintiffs have proved that they were ready and
willing to perform their part of the contract and by
Exs.P.17 to P.19, availability of funds for payment of
remaining consideration has also been proved. Further,
readiness and willingness of the plaintiffs and availability of
funds for payment of remaining consideration has been
held in favour of the plaintiffs while answering Point No.1.
Hence, the Trial Court has rightly arrived at the conclusion
that in view of plaintiffs always being ready and willing to
perform their part of the contract, availability of funds and
also in view of the conclusion that time was not essence of
the contract, plaintiffs have not committed any breach of
the terms of agreement of sale Ex.P.1.
44. The defendant has not performed her obligation
under the agreement, which amounts to breach of
conditions by her. Therefore, it is not open to the
defendant to allege breach by plaintiffs and terminate the
agreement to sell by defeating the very purpose of the
agreement. Challenge to the termination of agreement is
required only when vendor has complied her part of
obligation under the Agreement. On violating the
agreement, if she terminates the agreement prematurely,
it would amount to arbitrary action and leads to illegal
termination, which need not be challenged.
45. If the purchaser establishes readiness and
willingness as per Section 16 (c) of S.R Act, termination
has no consequences. In terms of Ex.P.1, parties have not
agreed for termination of contract as a consequence of
either party defaulting the conditions of the agreement.
When the agreed conditions do not provide for termination
of agreement, unilateral termination of agreement carries
no legal sanctity and does not extinguish the right
accrued to the purchaser to seek specific performance of
the agreement. Therefore, plaintiffs cannot be compelled
to seek declaration regarding such termination.
46. The judgment of Hon'ble Supreme Court relied on by
learned counsel for the defendant/appellant in the case of
I.S. Sikandar (D) by LRs (supra), is not applicable to the
facts of the present case. In the case before the Hon'ble
Supreme Court, the period to execute the sale deed was
extended on mutual agreement. The plaintiff was not
ready and willing to perform his part of the contract. Legal
notice was issued requesting for extension, extension was
granted, even after expiry of the extended period, plaintiff
could not get the sale deed executed. In the suit filed by
the plaintiffs vendor, specific issue was framed by the Trial
Court regarding readiness and willingness on the part of
the plaintiff to perform his part of the contract and the
same was answered against the plaintiff. In the said suit
no prayer was made challenging the termination of
agreement of sale. In view of the finding that plaintiff was
not ready and willing to perform his part of the contract,
the Hon'ble Supreme Court proceeded to hold that in view
of the valid termination of agreement to sell by issuance of
legal notice, without seeking declaratory relief regarding
termination of agreement of sale, suit for specific
performance is not maintainable.
Whereas, in the present case, the plaintiffs have
proved that they were ready and willing throughout to
perform their part of the contract. They had sufficient
funds to meet the remaining consideration. The defendant
has accepted additional advance consideration and
extended the time for execution of sale deed. Under
Ex.P.1 defendant had agreed to transfer the schedule
property without any court proceedings. As admitted by
the defendant, court proceedings were pending between
defendant and the tenants. The plaintiffs in their reply
notice and plaint have specifically contended that the delay
in not seeking registration of sale deed was due to non-
compliance of the conditions of agreement by the
defendant herself. Further, in view of our answer to Point
Nos.1 and 2 holding that plaintiffs were always ready and
willing to perform their part of the contract and time was
not essence of the contract, the judgment of Hon'ble
Supreme Court referred to supra is not applicable to the
facts and circumstances of the present case.
47. Reliance is placed on the judgment of the Hon'ble
Apex Court in the case of K. Karuppuraj (supra), to
contend that change of stand is not permitted without
amendment of pleadings to contend that it was never
agreed to execute the sale deed after eviction of the
tenants. Clause (6) of the agreement does not or could
not be read to mean that the property should be free from
occupancy. In view of specific language in Clause 6 of the
agreement and also in view of the specific admission of the
defendant in her cross-examination regarding litigating
tenants being in possession even as on the date of suit,
the above contention is not acceptable and the judgment is
not applicable to the facts of the present case.
48. Reliance was placed on the judgment of the Hon'ble
Apex Court in the case of Her Highness Maharani
Shantidevi P. Gaikwad vs. Savjibai Haribai Patel and
others (supra) and of Delhi High Court in the case of
Rajasthan Breweries Ltd. (supra), to contend that in
view of non-performance of the contract, defendant was at
liberty to terminate the contract. In the present case, as
agreed between the parties, either party committing
breach, the aggrieved party was entitled to enforce specific
performance and there was no specific Clause or
agreement for termination of the contract. Whereas, in the
case before the Hon'ble Supreme Court, the terms of
contract provided for termination of agreement. Hence,
those judgments are not applicable to the facts of the
present case.
49. Reliance is placed by learned counsel for the
respondents on the judgment of the Hon'ble Supreme
Court in the case of P. Daivasigamani (supra) to contend
that delay in filing specific performance suit is to be
considered with reference to the conduct of the vendee
and while exercising the discretionary relief, Court has to
consider factors including hardship to the vendor as well as
the vendee.
50. Further reliance has been placed on the Division
Bench judgment of this Court in the case of Pandurang
vs. Ravi in RFA No.100230/2027, dated 08.05.2020.
The above judgment refers to the relief to be granted in
consideration of Section 20 of S.R. Act on the ground of
hardship. Section 20 of S.R Act confers discretionary
jurisdiction on the Court to grant decree for specific
performance subject to discretion guided by judicial
principles and not being arbitrary.
51. Section 20(2) of S.R. Act provides for circumstances
in which Court may exercise discretion not to grant decree
of specific performance. To attract, Section 20(2) of S.R.
Act, the defendant has to specifically plead the
circumstances attracting Section 20(2) of S.R. Act. In the
present case, the defendant has not pleaded any
circumstance provided under Section 20(2) of S.R. Act.
Section 20(3) of S.R. Act provides for exercising
discretion to decree specific performance when plaintiff has
done substantial acts in consequence of contract. In the
present case, out of total consideration of Rs.24,50,000/-,
substantial amount of Rs.15,43,688/- has been paid.
Failure to exercise discretion to grant decree for specific
performance would cause hardship to the plaintiff. The
plaintiffs have paid substantial amounts out of the agreed
consideration and made available the remaining
consideration in their accounts during the agreement
period. The plaintiffs were always ready and willing to
perform their part of the contract. It is the defendant who
failed to perform her obligation under the contract while
enjoying the benefit of substantial consideration paid. If a
discretion to grant decree for specific performance is not
exercised in respect of agreement dated 13.05.2005 after
lapse of 18 years, the plaintiffs would be deprived of the
property as well as utilization of the substantial amounts
paid. In view of investment of time, money, the resources
and after lapse of approximately 18 years, the plaintiffs
would not be in a position to acquire similar property or
refund of the substantial amount would not have the same
value due to inflation. The Trial Court has rightly exercised
the discretion. Therefore, the above referred judgment
aptly applies to the facts of the present case.
52. The Trial Court on sound appreciation of evidence
and applicable law has rightly granted decree for specific
performance. We find no infirmity in the judgment of the
Trial Court warranting interference of this Court. Hence,
the following;
Order
Appeal is dismissed with costs.
Sd/-
JUDGE
Sd/-
JUDGE
mv
