Madras High Court
P.R.Nagaraj vs Dhanalakshmi on 3 January, 2024
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
AS.No.669 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 12.12.2023
PRONOUNCED ON : 03.01.2024
CORAM:
THE HON'BLE MR.JUSTICE G.K.ILANTHIRAIYAN
AS.No.669 of 2016 and
C.M.P.No.20404 of 2016
P.R.Nagaraj ... Appellant
Vs.
Dhanalakshmi ...Respondent
PRAYER:
Appeal Suit is filed under Section 96 of CPC against the judgment
and decree dated 25.02.2016 passed in O.S.No.97 of 2008 on the file of
the II Additional District and Sessions Court, Salem.
For Appellant : Mr.A.E.Ravichandran
For Respondent : Mr.K.Elango
1/22
https://www.mhc.tn.gov.in/judis
AS.No.669 of 2016
JUDGMENT
The Appeal suit is filed against the judgment and decree dated
25.02.2016 passed in O.S.No.97 of 2008 on the file of the II Additional
District and Sessions Court, Salem.
2. For the sake of convenience, the parties are referred to as per
their ranking in the trial Court.
3. The appellant is the plaintiff and the respondent is the defendant
in the suit. The case of the appellant is that the defendant owned the suit
property. She had agreed to sell the same to the Appellant and one,
R.Balasubramani for the sale consideration of Rs.975/-per sq.ft.,
Accordingly, on 05.02.2007, the plaintiff and another paid sum of
Rs.4,00,001/- as advance for part of sale consideration to the defendant
and they had entered into an agreement for sale. The period of contract
is fixed as four months from the date of agreement. Though, the plaintiff
and another have always been ready and willing to perform their part of
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contract, the defendant had been evading to execute the sale deed without
any reason. During the first week of June 2007, when the plaintiff and
another were insisted the defendant to receive the balance sale
consideration and execute the sale, the defendant informed that there is
some dispute in the subject properties, due to which a suit is pending.
Therefore, it requires further time to settle the issues and she sought
further time. Even then, the Respondent/Defendant did not come forward
to execute sale deed and as such, the Appellant/Plaintiff and another had
caused legal notice dated 21.02.2008, thereby called upon the
Respondent/Defendant to receive the balance sale consideration and
execute the sale deed. However, the said notice was returned as no such
member.
3.1. The further case of the plaintiff is that after verification of new
address of Respondent/Defendant, another notice was sent to her and the
same was received by her. Aggrieved by the same,
Respondent/Defendant issued a reply notice dated 20.03.2008 alleging
that it was fully a loan transaction and not an agreement for sale. After
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receipt of the reply, another person Balasubramanian had executed
assignment notice in favour of the Appellant/Plaintiff and thereby
assigning right for purchasing the suit property in favour of the
Appellant/Plaintiff after receipt of a sum of Rs.2,00,000/- from the
Appellant/Plaintiff. Thereafter, on 29.03.2008, the plaintiff caused
another notice to the respondent/defendant. Hence, the Appellant/Plaintiff
filed a suit for specific performance as against the Respondent/Defendant.
4. The Respondent/defendant filed her written statement and stated
that she never agreed to sell her property to plaintiff and another at any
point of time. The rate fixed in the alleged agreement is imaginary one.
The Appellant/Plaintiff and another are doing money lending business.
When the Respondent/Defendant in need of money to pursue her son's
education at New Delhi, she had approached the Appellant/Plaintiff for
borrowal of loan to the tune of Rs.2,00,000/- for interest. The
Respondent/Defendant also promised to return the same within a period
of three years. At the time of borrowal of loan amount, the
Appellant/Plaintiff had insisted her to execute document. Therefore, the
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Respondent/Defendant had signed in the blank stamp papers and other
papers. Accordingly, she signed and borrowed sum of Rs.2,00,000/- as
loan. Thereafter, the Appellant/Plaintiff and another had created a
fabricated alleged agreement for sale dated 05.02.2007 and filed a suit for
specific performance.
5. On perusal of the pleadings, the trial court framed following
issues:-
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thjp tpUg;gkhft[k; jahuhft[k; ,Ue;J te;jhuh>
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Thereafter, on 18.02.2016, the following additional issues were framed:
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eltof;ifah. my;yJ fld; mog;gilapy; Vw;gl;l eltof;ifah>
2/ thjpf;F khw;W ghpfhukhf gpujpthjpaplk; ,Ue;J Kd; bjhif
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jpUk;g fpilf;fj;jf;fjh>
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6. On the side of the Appellant/Plaintiff, he had examined P.W.1 to
P.W3 and marked Exhibits P.1 to P.10. On the side of Defendant, she
had examined D.W.1 and D.W.2 and marked Exhibits D.1 to D.20. On
perusal of the oral and documentary evidence, the trial Court dismissed
the suit for specific performance. Agreeived by the same, the present
appeal suit is filed.
7. The learned counsel for the appellant submitted that the trial
Court framed additional issues. However, the Appellant/Plaintiff was not
given any opportunity to deal with the issues while cross-examining the
witnesses. Even assuming that it is a loan transaction, the
Respondent/Defendant failed to prove the same with substantial evidence.
If at all it is a loan transaction, definitely she would have paid some
interest. The defendant duly signed in the agreement and received sum of
Rs.4,00,001/- as advance for part of sale consideration. Though the time
is essence of contract, only on the part of the Respondent/Defendant,
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there was a delay in filing the suit. The Respondent/Defendant only
informed that there was a civil suit in O.S.No.1128 of 2006 in respect of
the suit property. Therefore, the sale deed could be executed only after
the disposal of the civil suit. The Respondent/Defendant raised specific
plea that it is a loan transaction and at the time of borrowal of loan she
had signed in the blank stamp paper.
7.1. He further submitted that the agreement for sale revealed that
all the three persons signed and it could not be forged from the signature
of the defendant alone. Therefore, the agreement for sale is not fabricated
by the Appellant/Plaintiff. In the said agreement, own brother of the
defendant also signed as witness and he admitted his signature. The
Respondent/Defendant is being an educated lady, that too working as
teacher in the Government School, it is unbelievable to state that she had
signed in the blank papers for borrowal of loan amount. She
categorically admitted that she is well off and as such no need to borrow
any amount. The other person who entered with agreement for sale with
the Appellant/Plaintiff was examined as P.W.2. However, he was not
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cross-examined by the defendant. In fact the defendant was set ex-parte
on two occassions for non cross-examining the P.W.1. Therefore, the
expare decree was passed on 04.06.2012 and again on 17.04.2014. After
the ex-parte decree, the Appellant/Plaintiff had deposited the entire
balance sale consideration on 25.06.2012. After setting aside the exparte
decree and after the chief-examination of P.W.2, the whereabouts of said
P.W.2 was not known. Therefore, he could not be present before the trial
Court for cross-examination.
8. The learned counsel for the Respondent/Defendant would submit
that the Respondent/Defendant never entered into an agreement for sale
with the Appellant/Plaintiff, as she had no necessity to sell her property.
She had only borrowed a sum of Rs.2,00,000/- for the purpose of her
son's studies. At the time of borrowal of loan, she had signed in the blank
stamp paper and it was subsequently fabricated as agreement for sale by
the Appellant/Plaintiff. In the essence of contract, four months period is
fixed for execution of sale deed. Even assuming that the agreement for
sale is true, the Appellant/Plaintiff failed to come forward with the
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balance sale consideration for the execution of sale deed. There is alleged
agreement for sale dated 05.02.2007 between the Appellant/Plaintiff and
the Respondent/Defendant, whereas the Appellant/Plaintiff sent notice
only on 21.02.2008, that too sent to wrong address. During the period of
contract, there was no demand made by the Appellant/Plaintiff to perform
part of the defendant's contract. Therefore, the trial Court rightly
dismissed the suit for specific performance, since it is a discretionary
relief. He further submitted that when the Respondent/Defendant
specifically denied the very execution of agreement for sale, the
Appellant/Plaintiff ought to have proved the case beyond any doubt with
substantial evidence. The loan amount was borrowed only for the
purpose of defendant's son studies. In support of her contention, she
marked exhibit D.1 to D.20. Therefore, he prayed for dismissal of this
Appeal Suit.
9. Heard, the learned counsel appearing on either side.
10. On the submissions made by either side, the following points
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arise for consideration :
i) Whether the plaintiff proved his readiness and
willingness to perform his part of contract?
ii) Whether the plaintiff filed a suit within a reasonable
time when there is specific period mentioned in the
agreement for sale to perform his part of contract?
iii) Whether sufficient opportunities were given to the
plaintiff after framing additional issues?
11. The Respondent/Defendant denied the very execution of
agreement for sale dated 05.02.2007. On perusal of the agreement for
sale revealed that the sale consideration was fixed at Rs.975/- per sq.ft.,
without mentioning the total extent of the property. Without even
mentioning the total extent of the property, the Appellant/Plaintiff had
paid sum of Rs.4,00,001/- as advance. The time for execution of sale
deed was fixed at four months from the date of agreement and it expired
on 05.07.2007. However, the Appellant/Plaintiff did not issue any notice
thereby demanding to execute sale deed during the period of contract.
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The Appellant/Plaintiff sent notice on 21.02.2008. The Appellant/Plaintiff
also failed to state any reason for delay in issuance of notice of demand.
Though, the learned counsel for the Appellant submitted that while
asking for execution of sale deed, the Respondent/Defendant delayed for
the reason that already suit was pending in respect of the suit property in
O.S.No.1128 of 2006. On perusal of the plaint and the notice, nowhere
mentioned about the said suit, as if the defendant delayed the execution
of sale deed for the reason of suit pendency. Therefore, it is nothing but
afterthought, that too after filing the written statement and after marking
the plaint in O.S.No.1128 of 2006 as Ex.P.13 by the defendant.
12. Even after filing the suit, the Appellant/Plaintiff did not file any
application seeking permission to deposit the balance sale consideration.
Only after the ex-parte of Respondent/Defendant, the Appellant/Plaintiff
deposited the balance sale consideration. Therefore, the
Appellant/Plaintiff failed to prove his readiness and willingness to
perform his part of contract. The suit for specific performance is an
equitable and discretionary relief. When a person approaches the court
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for equitable relief has to come to court with clean hands. When the
suspicion is raised, discretion will not be exercised when it is inequitable
to grant the relief of specific performance on account of the conduct of the
Appellant/Plaintiff. Therefore, the Appellant/Plaintiff would be disentitled
to the relief of specific performance, if his contract is tainted with falsity.
The Respondent/Defendant raised specific plea that she never entered into
an agreement for sale and the agreement for sale is a fabricated one.
Therefore, the Appellant/Plaintiff should have taken steps to prove the
agreement for sale as genuine one. But, the Appellant/Plaintiff failed to
prove the same.
13. The learned counsel for the appellant submitted that though he
asked for alternative relief, the Court below failed to consider the same.
Even assuming that it is a loan transaction, the Appellant/Plaintiff is
entitled for alternative relief. On perusal of the judgment, revealed that
the trial Court had given liberty to the Appellant/Plaintiff to recover the
loan amount which was borrowed by the defendant with interest in
accordance with law in a separate proceedings.
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14. When the agreement for sale itself is not proved before the trial
Court, the amount which is involved in the agreement cannot be treated
as advance. If it is a loan transaction and if not repaid, then the
Appellant/Plaintiff is at liberty to recover the loan amount by separate
proceedings. The P.W.2 was examined in chief. Thereafter, the suit was
posted for cross-examination of P.W.2 and P.W.3 on 08.10.2014.
However, the P.W.2 was not present before the trial Court for cross-
examination. Therefore, the P.W.2 was not cross-examined on
17.03.2015. Instead, P.W.3 was cross-examined on the same day.
Therefore, the trial Court rightly eschewed the evidence of P.W2.
15. Further, as stated supra, the suit was not filed within a
reasonable time under section 16(c) of Specific Relief Act, it stipulates
continuous readiness and willingness on the part of plaintiff. It is a
condition for obtaining a relief of specific performance of contract. The
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Court exercises a discretionary jurisdiction, could be entitled to take into
consideration as to whether the said suit had been filed within a
reasonable time. What would be a reasonable time would however
depend upon the facts and circumstances of the each case. In the case on
hand, the specific time was fixed as four months in the contract from the
date of agreement for the sale. Even after expiry of four months, the
Appellant/Plaintiff did not take any steps to show his readiness and
willingness to perform his part of contract. The Appellant/Plaintiff also
failed to demand to perform the Respondent/defendant's part of contract.
It shows that the Appellant/Plaintiff failed to establish his readiness and
willingness to perform his part of contract as per the agreement for sale.
16. It is relevant to extract the judgment reported in 2023 (3) SCC
714 in the case of Desh Raj Vs. Rohtash Singh, as follows:-
“C.1 .Whether time was the essence of the
contract?
20. Before venturing into the aforementioned issue,
we must highlight that throughout the entire dispute,
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Appellants have taken a consistent stand of time-bound
performance being an essence of the contract. They have
maintained that sale deed was needed to be executed
necessarily on the Date of Execution as agreed between
the parties. It is unfortunate that all the courts below have
failed to render a finding on this aspect despite the fact
that this was one of the key defenses taken by the
Appellants in respect of the prayer seeking specific
performance.
21. In this respect, we must now take note of Section
55 of Contract Act which stipulates the aftermath in case
of failure to perform contractual obligations at fixed time.
The provision states –
55. Effect of failure to perform at fixed time, in
contract in which time is essential. - When a party to a
contract promises to do a certain thing at or before a
specified time, or certain things at or before specified
times, and fails to do any such thing at or before the
specified time, the contract, or so much of it as has not
been performed, becomes voidable at the option of the
promisee, if the intention of the parties was that time
should be of the essence of the contract.
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Effect of such failure when time is not essential- If it
was not the intention of the parties that time should be of
the essence of the contract, the contract does not become
voidable by the failure to do such thing at or before the
specified time; but the promisee is entitled to
compensation from the promisor for any loss occasioned
to him by such failure.
Effect of acceptance of performance at time other
than that agreed upon:- If, in case of a contract voidable
on account of the promisor’s failure to perform his
promise at the time agreed, the promisee accepts
performance of such promise at any time other than that
agreed, the promisee cannot claim compensation for any
loss occasioned by the non-performance of the promise at
the time agreed, unless, at the time of such acceptance, he
gives notice to the promisor of his intention to do so.
22. The Sale Agreements in the present case clearly
indicate the intention of the parties to treat time-bound
performance as an essential condition. They stipulate that
in case the sale deed was not executed on the Date of
Execution, the Sale Agreements were liable to be treated
as cancelled, and the earnest money was to be forfeited.
Even in the legal notices dated 18.08.2004, through which
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last opportunity was extended to Respondent to execute
the sale deed, the factum of time being an essential
condition for performance was reiterated. On the other
hand, no evidence or communication has been brought on
record by the Respondent to contradict the defense of
time-bound performance taken by the Appellants.
23. At this juncture, we must note the decision of this
Court in Citadel Fine Pharmaceuticals v Ramaniyam Real
Estates Private Ltd and Saradamani Kandappan v S.
Rajalakshmi wherein it was held that defense under
Section 55of Contract Act is valid against anyone who is
seeking the relief of specific performance. The facts of the
instant case make the observations in Saradamini
Kandappan even more pertinent, which are to the
following effect -
“36. The principle that time is not of the essence of
contracts relating to immovable properties took shape in
an era when market values of immovable properties were
stable and did not undergo any marked change even over
a few years (followed mechanically, even when value
ceased to be stable). As a consequence, time for
performance, stipulated in the agreement was assumed to
be not material, or at all events considered as merely
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indicating the reasonable period within which contract
should be performed. The assumption was that grant of
specific performance would not prejudice the vendor
defendant financially as there would not be much
difference in the market value of the property even if the
contract was performed after a few months. This principle
made sense during the first half of the twentieth century,
when there was comparatively very little inflation, in
India. The third quarter of the twentieth century saw a
very slow but steady increase in prices. But a drastic
change occurred from the beginning of the last quarter of
the twentieth century. There has been a galloping inflation
and prices of immovable properties have increased
steeply, by leaps and bounds. Market values of properties
are no longer stable or steady. We can take judicial notice
of the comparative purchase power of a rupee in the year
1975 and now, as also the steep increase in the value of
the immovable properties between then and now. It is no
exaggeration to say that properties in cities, worth a lakh
or so in or about 1975 to 1980, may cost a crore or more
now.
..........
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43. Till the issue is considered in an appropriate
case, we can only reiterate what has been suggested in
K.S. Vidyanadam [(1997) 3 SCC 1]:
(i) The courts, while exercising discretion in suits
for specific performance, should bear in mind that when
the parties prescribe a time/period, for taking certain
steps or for completion of the transaction, that must have
some significance and therefore time/period prescribed
cannot be ignored.
(ii) The courts will apply greater scrutiny and
strictness when considering whether the purchaser was
“ready and willing” to perform his part of the contract.
(iii) Every suit for specific performance need not be
decreed merely because it is filed within the period of
limitation by ignoring the time-limits stipulated in the
agreement. The courts will also “frown” upon suits which
are not filed immediately after the breach/refusal. The fact
that limitation is three years does not mean that a
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purchaser can wait for 1 or 2 years to file a suit and
obtain specific performance. The threeyear period is
intended to assist the purchasers in special cases, as for
example, where the major part of the consideration has
been paid to the vendor and possession has been
delivered in part-performance, where equity shifts in
favour of the purchaser.”
17. Thus it is clear that when the parties intended to treat the time
as the essence of the contract and that there was an undue delay to
institute the suit, the relief of specific performance cannot be granted.
Therefore, all the points are answered in favour of the
Respondent/Defendant. As such, this court finds no infirmity or illegality
in the judgment and decree passed by the learned trial court.
18. In the result, this appeal suit is dismissed and the judgement
and decree passed in O.S.No.97 of 2008 dated 25.02.2016 on the file of
the II Additional District and Sessions Court, Salem is confirmed. No
costs. Consequently, connected miscellaneous petition is closed.
03.01.2024
Index : Yes / No
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Internet : Yes / No
Speaking order /Non-speaking order
gvn
To
The II Additional District and
Sessions Court, Salem
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G.K.ILANTHIRAIYAN, J.
gvn
AS.No.669 of 2016 and
03.01.2024
https://www.mhc.tn.gov.in/judis
