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Saturday, August 6, 2016

Specific performance of sale agreement - termination notice was also given = the defendant sent legal notice on 28.03.1985 to the plaintiff extending time to the plaintiff to pay sale consideration on or before 10.04.1985 with a warning that his failure to comply with the same, sale agreement dated 25.12.1983 would be terminated. The plaintiff did not perform his part of the contract within the extended period of legal notice. In those circumstances, the Apex Court treated the contract was not existing by the date of filing the suit for specific performance and held suit is not maintainable without a prayer for declaratory relief.

                                                           REPORTABLE

                   IN THE SUPREME COURT OF INDIA                CIVIL
           APPELLATE JURISDICTION




                   CIVIL APPEAL NO. 7306 OF 2013         (Arising out of SLP
           (C) No. 20367 of 2009)




I.S. SIKANDAR (D) BY LRs.           ... APPELLANTS

                              VS.

K. SUBRAMANI & ORS.                         ... RESPONDENTS



                               J U D G M E N T




      V. Gopala Gowda, J.

           Leave granted.

      2.    This civil appeal is directed against  the  judgment  and  order
      dated 08.12.2008 passed in Regular First Appeal No. 97 of 2001 by  the
      High Court of Karnataka, Bangalore, urging certain relevant facts  and
      legal contentions, whereby the High Court has  reversed  the  judgment
      and decree passed  in  the  Original  Suit  No.  2012  of  1985  dated
      25.09.2000 by the X1th Additional City Civil  Judge,  Bangalore  City,
      Bangalore and has modified the decree by allowing the appeal, granting
      the decree for specific performance of the Agreement of Sale in favour
      of the respondent No.1/plaintiff in  relation  to  the  suit  schedule
      property. Further, it has granted the decree of  permanent  injunction
      against the defendants restraining  them  from  interfering  with  the
      respondent No.1/plaintiff’s peaceful possession and enjoyment  of  the
      suit schedule property.

      3.    Necessary facts and legal contentions urged  on  behalf  of  the
      parties are stated herein with a view to find out as  to  whether  the
      impugned judgment and  decree  in  granting  the  relief  of  specific
      performance of the sale of the suit schedule property in favour of the
      plaintiff requires to be set aside by allowing this appeal.

            In this judgment for the sake of brevity, we would like to refer
      to the ranking of the parties as  assigned  in  the  plaint  presented
      before the trial court. Since there is incongruence in the  mentioning
      of exhibits in the judgments of the trial court as well as of the High
      Court, we will refer to the documents as per the  annexures  presented
      along with this appeal.

           The plaintiff  (respondent  No.1  herein)  instituted  O.S.  No.
      2012/85 before the Additional Civil Judge for grant  of  a  decree  of
      specific performance in respect of suit schedule property on the basis
      of the Agreement of Sale dated 25.12.1983  (Annex.P-1)  and  also  for
      grant  of  permanent  injunction  restraining  the   defendants   from
      interfering with his peaceful possession and  enjoyment  of  the  suit
      schedule property.  The suit property covered in the Agreement of Sale
      was a vacant site measuring 54 ft. from East to West and 42  ft.  from
      North to South carved out of survey  Nos.  18/2,  19,  20  and  21  of
      Agrahara  Thimmasandra  village,  known  as  C.K.  Chinnappa   Garden,
      Bangalore North Taluk, within  the  territorial  jurisdiction  of  the
      Bruhat Bangalore Mahanagara Palike (for short “BBMP”). It is the  case
      of the plaintiff that he entered into an agreement with defendant Nos.
      1-4 for sale of the suit property in his favour for  consideration  of
      Rs.45,000/-.   A  sum  of  Rs.5000/-  was  paid  towards   part   sale
      consideration to the defendant Nos.1-4  and  they  delivered  original
      title deeds and put the plaintiff in physical possession of  the  suit
      schedule property.  They  had  agreed  to  receive  the  balance  sale
      consideration amount of Rs.40,000/- at the time of registration of the
      sale deed to be executed in favour of the plaintiff within five months
      after securing  necessary  permission  from  the  Urban  Land  Ceiling
      Authority under the provisions of Urban Land (Ceiling and  Regulation)
      Act, 1976 (for short ‘ULCR Act’) now repealed,  and  Income  Tax  Act,
      1961  and also to get change of khata of the suit schedule property in
      their names from that of the deceased husband of the  first  defendant
      in the property register maintained by the BBMP at  the  cost  of  the
      plaintiff. Further, the plaintiff had an obligation to pay the  layout
      and conversion charges to the BBMP  and  bear  the  vendors  cost  for
      securing the permission from the aforesaid authorities.   Further,  it
      is the case of the plaintiff that the time for completion of the  sale
      of the suit property was agreed to be extended by two months  in  case
      of  delay  in  securing  the  permission  from  the   above   referred
      authorities which  might  in  turn  cause  delay  in  payment  of  the
      conversion charges.

      4.    It is the case of the plaintiff that on being put in  possession
      of the suit property, he erected cattle shed to tether cattle and paid
      betterment charges on 25.04.1984 to the concerned  authorities.  There
      is an acknowledgement to this effect and he  also  secured  change  of
      khata on 02.05.1984 and paid the property taxes to the  BBMP  for  the
      period 1977 to 1983-84 and thereafter, he also paid the  property  tax
      to the BBMP for the future years.

      5.    The case of the plaintiff is  that  the  defendant  Nos.1-4  got
      issued legal  notice  dated  06.03.1985  (Annex.  P-2)  through  their
      counsel calling upon the plaintiff to comply  with  his  part  of  the
      contract by  paying  the  balance  sale  consideration  on  or  before
      18.03.1985 failing which legal action  would  follow,  for  which  the
      plaintiff had issued a reply dated  16.03.1985  (Annex.  P-3)  calling
      upon the defendant Nos.1-4 to execute the conveyance deed and  receive
      the balance sale consideration on 23.05.1985  by  securing  the  draft
      sale deed five days prior thereto. By another letter dated  04.05.1985
      (Annex. P-5) he requested the vendors to  go  to  the  sub-Registrar’s
      office on 23.05.1985 and execute the deed of conveyance in his favour.
       He further pleaded in the plaint that the vendors by a telegram dated
      18.05.1985 declined to accede to  his  request  and  stated  that  the
      Agreement of Sale was rescinded by the defendants by  a  letter  dated
      28.03.1985, which is  a  legal  notice  sent  by  them  through  their
      advocate to the plaintiff, wherein he was called upon  to  return  the
      original documents of suit property  given  to  him  at  the  time  of
      execution of the Agreement of Sale and on his failure to do so  on  or
      before 10.04.1985, the said agreement  dated  25.12.1983  would  stand
      terminated vide the aforesaid notice.

      6.    After institution of the original  suit  by  the  plaintiff  for
      specific performance and permanent injunction  against  the  defendant
      Nos.1-4, the vendors  who  were  served  with  the  suit  summons  and
      notices, remained absent and unrepresented  in  the  proceedings,  and
      therefore they were placed ex-parte. An interlocutory application  was
      filed by the appellant to implead himself  as  5th  defendant  to  the
      original  suit  proceedings  pleading  that  he  is  the   proper  and
      necessary party to the original suit proceedings, claiming that he had
      purchased  the  suit  schedule  property  under  a  sale  deed   dated
      30.05.1985 from his vendors viz. defendant Nos.1-4 (Annex.  P-6).  The
      said application was allowed by the trial court. He was  permitted  to
      be impleaded as defendant No.5 in the original suit proceedings and he
      resisted the suit by filing  a  written  statement  dated  13.12.1989,
      inter alia, admitting that defendant Nos. 1-4 were the owners  of  the
      suit schedule property and further he denied the plea of the plaintiff
      that he is being in possession of the suit  property.  It  is  further
      stated that the deed of conveyance in respect  of  the  suit  schedule
      property was executed by the defendant Nos. 1-4 in  his  favour  after
      obtaining necessary permission from the competent authority under  the
      ULCR Act by letter dated 25.05.1985 and therefore, he has pleaded that
      the reliefs  sought  for  by  the  plaintiff  in  the  suit  filed  on
      26.06.1985 became infructuous.  It is further pleaded that because  of
      default committed by the plaintiff,  he  is  disentitled  to  get  the
      decree for specific performance of sale of the property on  the  basis
      of the Agreement of Sale.

      7.   The trial court on the basis of pleadings of the  parties  framed
      six issues:

           1) Whether the plaintiff  proves  that  defendant  Nos.1-4  have
           executed  Agreement  of  Sale  dated  25.12.1983  and  delivered
           possession of the same?

           2)  Whether the plaintiff proves that he is in lawful possession
           of the suit property?

           3)    Whether the 5th defendant proves  that  he  purchased  the
           property under sale deed dated 30.05.1985 and is  in  possession
           of it?

           4) Whether plaintiff was always ready and willing to perform his
           part of the obligation?

           5) Whether the  5th  defendant  proves  that  plaintiff  is  the
           defaulter and is not ready and willing to perform  his  part  of
           the obligation?

           6)  Whether  the  defendant  proves  that   plaintiff   put   up
           construction after the completion of the sale?

      8.    The original suit went for trial; plaintiff was examined as PW-1
      and marked 27 documents as  Exhs.  P1-  to  P-27.  On  behalf  of  the
      defendants, the 5th defendant was examined as DW-1 and another witness
      named K.N.Prakash as DW-2 and marked 4 documents as Exhs.D-1 to D-4 to
      prove his case.  The trial court on  appreciation  of  the  pleadings,
      documentary and oral evidence on record has recorded the  findings  of
      fact in the affirmative on the issue Nos. 1,  2  and  5  and  answered
      issue No.3 partly in affirmative  and  issue  Nos.  4  and  6  in  the
      negative.  The trial court in its judgment has recorded the finding of
      fact holding that 5th defendant is the  owner  of  the  suit  property
      pursuant to sale deed dated 30.05.1985 and  he  is  entitled  to  take
      possession of the same from the plaintiff in accordance with  law  and
      accordingly, partly decreed the suit in his favour vide  judgment  and
      decree dated 25.09.2000.

      9.  Aggrieved by the said judgment and decree, the plaintiff preferred
      Regular First Appeal before the High  Court  of  Karnakata  which  was
      registered as RFA No. 97/2001, urging various  legal  contentions  and
      prayed to set aside the same in so far as dismissal of  the  suit  for
      grant of the decree  for  specific  performance  in  respect  of  suit
      schedule property on the basis of sale deed is concerned.

      10.  The legal contention urged before the High Court on behalf of the
      plaintiff is  that  the  trial  court  has  erroneously  recorded  its
      findings on the above contentious issue Nos. 1, 2, 3, 4  &  5  without
      appreciating the plaint averments and the evidence  on  record  having
      regard to the undisputed  fact  that  the   Agreement  of  Sale  dated
      25.12.1983 and the covenants of the  said  agreement  provide  limited
      obligation on the part of the plaintiff to pay the layout charges  and
      expenses required to be incurred by him to enable the defendant Nos. 1-
      4, to secure the permission from the authorities under  the  ULCR  Act
      and Income Tax Act for execution  and  registration  of  the  deed  of
      conveyance in his favour. It is further contended  on  behalf  of  the
      plaintiff that he paid the betterment charges and  property  taxes  to
      the BBMP within the stipulated time, and in addition to  that  he  got
      secured the change of khata in favour  of  the  defendant  Nos.1-4  in
      respect of the suit schedule property as agreed upon  by  him  in  the
      agreement. He further contended that the trial court has  recorded  an
      erroneous finding of fact holding that the plaintiff  did  not  secure
      the permission from the competent authority under the ULCR Act and the
      Income Tax Authority to execute and register the sale deed  as  agreed
      by  the  defendant  Nos.1-4.  Therefore,  it  is  contended  that  the
      defendant Nos. 1-4 committed breach of Agreement of Sale and therefore
      the plaintiff is entitled for the decree for specific  performance  of
      execution of the sale deed on the basis of the Agreement of  Sale.  It
      is further contended that the plaintiff has been ready and willing  at
      all material times, and even as on 28.03.1985, to pay the balance sale
      consideration amount to defendant Nos. 1-4 on execution of the deed of
      conveyance of the suit property. He further urged in the  appeal  that
      execution of the sale deed dated  30.05.1985  in  favour  of  the  5th
      defendant for a sale consideration of an amount  of  Rs.48,000/-  that
      is, Rs.3000/- in excess of what was agreed upon  with  the  plaintiff,
      would demonstrate that the defendant Nos.1-4 took undue advantage  and
      committed the breach of the terms  and  conditions  of  the  contract.
      Further, it is urged that the above aspects of the matter has not been
      properly appreciated by the trial court while dismissing the suit  for
      not granting the relief of specific performance in respect of the suit
      schedule property in favour of the plaintiff.      It is also urged in
      the R.F.A. before the High Court that defendant Nos. 1-4 were required
      to secure permission under the ULCR Act and Income Tax  Department  to
      convey the suit property in favour of the 5th defendant, which further
      demonstrates that without such a permission, the registration of  deed
      of conveyance in  favour  of  the  5th  defendant  was  impermissible,
      thereby the defendant Nos. 1-4  committed  a  serious  breach  of  the
      obligation in terms of Agreement of  Sale  dated  25.12.1983.  It  was
      further contended that the plaintiff was carrying  cash  with  him  to
      prove that he had necessary funds to  pass  on  consideration  to  the
      defendant Nos.1-4 at the time of registration of the sale deed and the
      learned counsel has placed reliance on the reported decision  of  this
      Court in Sukhbir Singh & Ors. Vs. Brij  Pal  Singh  &  Ors.[1]  It  is
      further contended with reference to para 24 of  the  judgment  of  the
      trial court, that the trial court fell into  error  in  recording  the
      finding of fact on the contentious issue No.3  holding  that  the  5th
      defendant is the owner of the suit schedule property  in  pursuant  to
      the sale deed dated  30.05.1985  although  he  had  knowledge  of  the
      Agreement of Sale dated 25.12.1983 in  favour  of  the  plaintiff  and
      therefore he is not the bona fide purchaser.

      11. The said legal contention was seriously contested on behalf of the
      5th defendant justifying the finding and reasons recorded by the trial
      court on the above contentious issue No.3 contending  that  the  trial
      court on proper appreciation of pleadings and evidence on  record  has
      rightly answered in his favour  and  against  the  plaintiff.  He  has
      further contended that the reply notice dated 16.03.1985   which   was
      issued by the

      plaintiff shows the delay and inconvenience caused by the plaintiff to
      the vendors of the 5th defendant.  The  vendors  waited  patiently  by
      extending time for registration of the sale deed  in  respect  of  the
      suit schedule property and the plaintiff was called upon  by  them  to
      get the sale deed executed in his favour by paying  the  balance  sale
      consideration, but he had avoided the same on one pretext or the other
      leading to the conclusion that he was not ready and willing to perform
      his part of contract and therefore they  rescinded  the  contract  and
      executed the sale deed dated 30.05.1985 in favour of the 5th defendant
      in respect of the suit schedule  property.   He  has  also  sought  to
      justify  the findings on issue Nos. 4 and 5 by placing strong reliance
      upon the evidence of PW-1, the plaintiff to show that the findings  of
      fact recorded by the trial  court  on  the  above  contentious  issues
      holding that the plaintiff was not ready and willing at any  point  of
      time to pay the expenses to the defendant Nos.  1-4.  He  has  further
      contended that though  they  made  a  demand  by  legal  notice  dated
      06.03.1985 to get the sale deed  executed  on  or  before  18.03.1985,
      failure on the part of the plaintiff to do the same would  demonstrate
      the fact that he was not ready and willing to perform his part of  the
      contract by paying  the  balance  sale  consideration  amount  to  the
      defendant Nos.  1-4 as agreed upon by him and further placed  reliance
      on the Agreement of Sale dated 25.12.1983 of the suit property to show
      that defendant Nos. 1-4 were in dire necessity of money,  due  to  the
      death of the husband of the first defendant who was the bread  winner,
      and therefore they had agreed to sell the suit  schedule  property  to
      the plaintiff. Further, it is contended  by  the  learned  counsel  on
      behalf of the 5th defendant that time was the essence of the  contract
      as per Section 55 of the Contract Act as agreed upon by the parties in
      the agreement which has  not  been  performed  by  the  plaintiff  and
      therefore the trial court has rightly declined to grant the decree  of
      specific performance in favour of the plaintiff.

      12.    Therefore, the learned counsel on behalf of the  5th  defendant
      placed reliance on the reported decisions of the Division Bench of the
      Karnataka High Court and this Court in the cases of  Saraswathi  Ammal
      Vs. V.C. Lingam[2]; Manjunath Anandappa  Vs.  Tammanasa[3]    and  His
      Holyness Acharya Swamy Ganesh Dassji Vs. Shri Sita Ram  Thapar[4],  in
      justification of the findings and reasons recorded by the trial  court
      on the contentious issues framed by it.

      13. The first appellate court, on the basis of factual and rival legal
      contentions urged on behalf of the parties, has framed  the  following
      points for its determination:

        i) On issue No.3, whether the 5th defendant purchased the  property
           under the sale deed dated 30.05.1985?

       ii) Whether the 5th defendant was entitled to take possession of the
           suit schedule property in accordance with law?

      iii) On issue Nos. 4 & 5 – whether the 5th defendant has  proved  the
           plaintiff to be a defaulter, who is not  ready  and  willing  to
           perform his part of the obligation?

      14.  The High Court in exercise  of  its  appellate  jurisdiction  has
      answered in favour of the plaintiff and passed the  impugned  judgment
      and decree after adverting to Section 16 (c) of  the  Specific  Relief
      Act, 1963 and  sub-sections  (1)  and  (2)  of  Section  20  regarding
      discretionary power to be exercised by the court for grant of a decree
      of specific performance in his favour. It  is  observed  by  the  High
      Court that the court is not commonly bound to grant  such  relief,  if
      merely  it  is  lawful  to  do  so,  and  such  discretion  cannot  be
      arbitrarily refused but on sound and  reasonable  grounds,  guided  by
      judicial principles and capable of correction by the court of  appeal.




           He has referred to the judgment in the case of Parakunnan Veetill
      Joseph’s son Mathew Vs. Nedumbara Kuruvila’s son & Ors.[5], in support
      of the proposition of law that the court  must  meticulously  consider
      all the facts and circumstances of the case for grant of a decree  for
      specific performance and the court should take care to see that it  is
      not used as an instrument of oppression to have an  unfair  advantage.
      Further reliance is placed upon another  judgment  of  this  Court  in
      Nirmala Anand Vs. Advent Corporation Pvt. Limited &  Ors.[6],  wherein
      this Court has held that specific performance is an  equitable  relief
      and the Court has to strike a balance of equities between the  parties
      keeping in view  the  relevant  aspects,  including  the  lapses  that
      occurred in the facts of the case. Further, the High  Court  has  held
      that the parties are respectively responsible and though the plaintiff-
      purchaser always remained ready and willing to perform his part of the
      contract, the defendant Nos.1-4  have  not  performed  their  part  of
      contract.  Therefore, the High Court has set  aside  the  findings  of
      fact on the contentious issues recorded by the trial court against the
      plaintiff.  Further, the learned Judge of the High Court has held that
      Section 53-A of the Transfer of Property Act, 1882 provides protection
      to a transferee on certain conditions, one of which is that transferee
      has performed or is willing to perform his part of the contract. It is
      further held that once a  party  to  a  contract  has  repudiated  the
      contract, it is not necessary for the other party to tender the amount
      payable under the contract in the manner provided in the  contract  in
      order to successfully claim the specific performance of  the  contract
      by placing reliance upon  the  judgment  of  this  Court  reported  in
      International Contractors Ltd. Vs. Prasanta  Kumar  Sur  (Deceased)  &
      Ors[7]. wherein this Court has explained the above legal position.  In
      another decision in A. Maria Angelena Vs.  A.G.  Balkis  Bee[8],  this
      Court has made observations with reference to the plea that for  grant
      of a decree for specific performance would result in serious  hardship
      to the vendor or the  subsequent  purchaser  and  that  the  plaintiff
      should be compensated in terms of money must be taken at the  earliest
      stage.  Further,  the  High  Court  with  reference  to  the  deed  of
      conveyance in favour of the 5th defendant executed by defendant Nos. 1-
      4 raised the question as to whether the defendant No.5 was a bona fide
      purchaser for consideration without notice of the earlier Agreement of
      Sale in favour of the plaintiff is examined and answered  against  the
      5th defendant.  The  defendant  Nos.  1-4  have  remained  absent  and
      unrepresented in the original suit proceedings, hence they were placed
      ex-parte, and therefore, the  plea  of  the  5th  defendant  that  the
      plaintiff must always be ready and willing to perform his part of  the
      contract under such circumstances is wholly untenable in law.  In view
      of the said factual position, the plea that the plaintiff has not been
      ready and  willing  to  perform  his  part  of  contract  as  per  the
      agreement, is available to  the  5th  defendant  under  the  concluded
      contract  between  the  plaintiff  and  defendant  Nos.  1-4,  as  per
      Agreement of Sale dated 25.12.1983. In this regard, the High Court has
      placed reliance upon the judgment of this Court  in  MMS  Investments,
      Madurai  &  Ors.  Vs.  V.  Veerappan  &  Ors.[9]  in  support  of  the
      proposition of law that the 5th defendant stepped into  the  shoes  of
      the vendors, and that the question of readiness and willingness cannot
      be pressed into service at all in facts  of  the  case.   The  learned
      Judge of the High Court while recording his findings  and  reasons  on
      the contentious issues has            re-appreciated the pleadings and
      evidence on record with reference to rival legal contentions,  and  he
      has placed reliance upon the catena of decisions of this Court and the
      Division Bench of the Karnataka High  Court  and  has  held  that  not
      granting of the decree for  specific  performance  in  favour  of  the
      plaintiff is held to be bad in law and he has set aside  the  judgment
      and decree of the trial court  and  the  same  was  modified  granting
      decree for specific performance as per Agreement of Sale in favour  of
      the plaintiff and modified  the  judgment  restraining  the  defendant
      Nos.1-4 not to disturb  the  possession  and  enjoyment  of  the  suit
      schedule property of the plaintiff.


      15. The legality and validity of the impugned judgment and decree  are
      challenged in this appeal by the deceased 5th defendant, subsequently,
      he is substituted by his legal  representatives,  by  framing  certain
      questions of law and urged various grounds in  support  of  the  same.
      The questions of law  and  grounds  urged  in  this  appeal  would  be
      adverted while answering the points that are framed in this judgment.


      16.    After perusal of the impugned judgment of the  High  Court  and
      the questions of law framed by the defendant No.5 in this appeal,  the
      following points would arise for determination of this Court:


           1) Whether the original suit filed by the  plaintiff  seeking  a
           decree for specific performance against the defendant  Nos.  1-4
           in respect of the suit schedule  property  without  seeking  the
           declaratory   relief   with  respect  to  termination   of   the
           Agreement of Sale vide notice dated  28.3.1985,  rescinding  the
           contract, is maintainable in law?


           2)  Whether the reversal of the findings of the trial  court  on
           the issue Nos. 3, 4 and 5  by the High Court and  answering  the
           same in favour of the plaintiff in  the  impugned  judgment  and
           granting the decree for specific performance in  favour  of  the
           plaintiff in respect of  the  schedule  property  is  legal  and
           valid?
           (3) Whether the grant  of  decree  of  specific  performance  in
           favour of the plaintiff despite Clause 12 of  the  Agreement  of
           Sale dated 25.12.1983 is legal and valid?


           (4)  Whether the grant of the decree is in conformity with  sub-
           sections (1) and (2) of Section 20 of the  Specific  Relief  Act
           and whether the learned Judge of the High  Court  has  exercised
           his discretionary power  reasonably  in  granting  the  same  in
           favour of the plaintiff?
           5)    What decree or order to be passed?




      17.    Answer to Point No.1

            The first point is answered in favour of the defendant No. 5 by
      assigning the following reasons:

            It is an undisputed fact that there is  an  Agreement  of  Sale
      executed by defendant Nos. 1-4  dated  25.12.1983  in  favour  of  the
      plaintiff agreeing to sell the schedule property in his favour  for  a
      sum of Rs. 45,000/- by receiving  an  advance  sale  consideration  of
      Rs.5,000/- and the plaintiff had further  agreed  that  the  remaining
      sale consideration will be paid to them at the time  of  execution  of
      the sale deed.  As per Clause 6 of the Agreement of Sale, the time  to
      get the sale deed executed was specified as 5 months in favour of  the
      plaintiff  by  the  defendant  Nos.1-4,  after   obtaining   necessary
      permission from the competent  authorities  such  as  the  Urban  Land
      Ceiling  Authority  and  Income  Tax  Department  for  execution   and
      registration of the  sale  deed  at  the  cost  and  expenses  of  the
      plaintiff.  If there is any delay in  obtaining  necessary  permission
      from the above authorities and the payment of layout charges, the time
      for due performance of agreement  shall  further  be  extended  for  a
      period of two months from the date of grant of  such  permission.   In
      the instant case,  permission  from  the  above  authorities  was  not
      obtained from defendant Nos. 1-4. The period of five months stipulated
      under clause 6 of the Agreement of Sale for execution and registration
      of the sale deed in favour of the plaintiff had expired.  Despite  the
      same, the defendant Nos. 1-4 got issued legal notice dated  06.03.1985
      to the plaintiff pointing out that he has failed to perform  his  part
      of the contract in terms of  the  Agreement  of  Sale  by  not  paying
      balance sale consideration to them and getting the sale deed  executed
      in  his  favour  and  called  upon  him  to  pay  the   balance   sale
      consideration and get the sale deed executed on or  before  18.3.1985.
      The plaintiff had issued reply letter dated 16.3.1985 to the advocates
      of defendant Nos. 1-4,  in  which  he  had  admitted  his  default  in
      performing his part of contract and prayed time till 23.05.1985 to get
      the sale deed executed in his  favour.   Another  legal  notice  dated
      28.03.1985 was sent by the first defendant to the plaintiff  extending
      time to the plaintiff asking him to pay the sale consideration  amount
      and get the sale deed executed on or before 10.04.1985, and on failure
      to comply with the same, the Agreement of Sale dated 25.12.1983  would
      be terminated since the plaintiff did not avail the time  extended  to
      him by defendant Nos. 1-4. Since the plaintiff  did  not  perform  his
      part of contract within  the  extended  period  in  the  legal  notice
      referred to supra, the Agreement of Sale was terminated as per  notice
      dated 28.03.1985 and thus, there is termination of  the  Agreement  of
      Sale between the plaintiff and defendant Nos. 1-4  w.e.f.  10.04.1985.
      As could be seen from the prayer sought for in the original suit,  the
      plaintiff has  not  sought  for  declaratory  relief  to  declare  the
      termination of Agreement of Sale as bad in law.   In  the  absence  of
      such prayer by the plaintiff the original suit filed by him before the
      trial court for grant of decree for specific performance in respect of
      the suit schedule property on the  basis  of  Agreement  of  Sale  and
      consequential  relief  of  decree  for  permanent  injunction  is  not
      maintainable in law.  Therefore, we  have  to  hold  that  the  relief
      sought  for  by  the  plaintiff  for  grant  of  decree  for  specific
      performance of execution of sale deed in respect of the suit  schedule
      property in his favour on the basis of non existing Agreement of  Sale
      is wholly unsustainable in  law.  Accordingly,  the  point  No.  1  is
      answered in favour of the defendant No.5.

      18. Answer to Point No. 2

            Even if we assume that the Agreement of Sale dated 25.12.1983 is
      subsisting, we have to answer point No. 2 in favour of defendant  No.5
      for the following reasons :-

            It would be very much relevant for us to extract Clause 6 of the
      Agreement of Sale which reads thus:

              “The time fixed for execution  and  completion  of  the  sale
              transaction is five months from the date of the agreement  of
              sale.  The first parties have agreed  to  get  the  necessary
              permission for registration from  the  competent  authorities
              such as the Urban Land Ceiling  authorities  and  Income  Tax
              Authority within the said period of five months at  the  cost
              and expenses of the  Second  Party.   The  Second  Party  has
              agreed to pay the necessary layout and conversion charges  of
              the suit property to the concerned  authorities.   The  first
              party have further agreed with the second party  that  if  in
              case the necessary permission from the aforesaid  authorities
              is delayed and as a consequence thereof the payment of layout
              charges is delayed, the  time  for  due  performance  of  the
              agreement shall stand extended for  a  further  period  of  2
              months from the date of grant of such permission.”




           This position of law is  well  settled  by  this  Court  in  the
      Constitution Bench judgment in Smt.Chand Rani (dead) by LRs. Vs.  Smt.
      Kamal Rani(dead) by LRs.[10]; wherein this Court has held that  it  is
      well settled principle of law, that in a case  of  sale  of  immovable
      property, time is not the essence of the  contract.  However,  If  the
      parties agreed to a specified time in the agreement to  perform  their
      part of the contract, then time is the essence  of  the  contract  and
      parties shall adhere to the same.

           To emphasize the fact that time is the essence of  the  contract
      before the High Court, the counsel for the 5th  defendant  has  placed
      reliance upon the judgment of this Court in Chand Rani’s case (supra),
      the relevant portions of which are extracted below:


           “19. It is a well-accepted principle that in the case of sale of
           immovable property, time is never regarded as the essence of the
           contract. In fact, there is a presumption against time being the
           essence of the contract.  This  principle  is  not  in  any  way
           different from that obtainable in  England.  Under  the  law  of
           equity which governs the rights of the parties in  the  case  of
           specific performance of contract to sell real estate, law  looks
           not at the letter but at the substance of the agreement. It  has
           to be ascertained whether under the terms of  the  contract  the
           parties named a specific time within  which  completion  was  to
           take place, really and in substance  it  was  intended  that  it
           should be completed within a reasonable time.  An  intention  to
           make time the essence of  the  contract  must  be  expressed  in
           unequivocal language.”




           20.  “…… Section 55 of the Contract Act  which  deals  with  the
           consequences of failure to perform an executory contract  at  or
           before the stipulated time provides by the first paragraph:
           ‘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.’
           It is not merely because of specification of time at  or  before
           which the thing to be done under the contract is promised to  be
           done and default in compliance therewith, that the  other  party
           may avoid the contract. Such an option  arises  only  if  it  is
           intended by the parties that time  is  of  the  essence  of  the
           contract. Intention to make time of the essence, if expressed in
           writing, must be in language which is unmistakable: it may  also
           be inferred from the nature of the property agreed to  be  sold,
           conduct of the parties and the surrounding circumstances  at  or
           before the contract. Specific performance  of  a  contract  will
           ordinarily be granted, notwithstanding default in  carrying  out
           the contract within the specified period, if  having  regard  to
           the express stipulations of the parties, nature of the  property
           and the surrounding circumstances,  it  is  not  inequitable  to
           grant the relief. If the contract relates to sale  of  immovable
           property, it would normally be presumed that time was not of the
           essence of the  contract.  Mere  incorporation  in  the  written
           agreement of a clause imposing penalty in case of  default  does
           not by itself evidence an intention to make time of the essence.
           In Jamshed Khodaram Irani v. Burjorji  Dhunjibhai  the  Judicial
           Committee of the  Privy  Council  observed  that  the  principle
           underlying Section 55 of the Contract Act did  not  differ  from
           those which  obtained  under  the  law  of  England  as  regards
           contracts for sale of land.”




           22. In Hind Construction  Contractors  case  quoting  Halsbury’s
           Laws of England, this Court observed at pages 1154-55 as  under:
           (SCC pp. 76-77, paras 7 & 8)


                 “In the latest 4th edn. of Halsbury’s Laws of  England  in
           regard to building and engineering contracts  the  statement  of
           law is to be found in Vol. 4, para 1179, which runs thus:
                 ‘1179.  Where time is of the essence of the contract. — The
           expression time is of the essence means that  a  breach  of  the
           condition as to  the  time  for  performance  will  entitle  the
           innocent party to consider the breach as a  repudiation  of  the
           contract.  Exceptionally,  the  completion  of  the  work  by  a
           specified date may be a condition precedent to the  contractor’s
           right to claim payment. The parties may expressly  provide  that
           time is of the essence of the contract and where there is  power
           to determine the contract  on  a  failure  to  complete  by  the
           specified date, the stipulation as to time will be  fundamental.
           Other provisions of the contract may, on the construction of the
           contract, exclude an inference that the completion of the  works
           by a particular date is fundamental; time is not of the  essence
           where a sum is payable for  each  week  that  the  work  remains
           incomplete  after  the  date  fixed,  nor  where   the   parties
           contemplate a postponement of completion.
                 Where time has not been made of the essence of the contract
           or, by reason of  waiver,  the  time  fixed  has  ceased  to  be
           applicable, the employer may by notice fix a reasonable time for
           the completion of the work  and  dismiss  the  contractor  on  a
           failure to complete by the date so fixed.’


                 It will be clear from the aforesaid statement of law  that
           even where the parties have expressly provided that time of  the
           essence of the contract such a stipulation will have to be  read
           along with other provisions  of  the  contract  and  such  other
           provisions may, on construction of  the  contract,  exclude  the
           inference that the completion of the work by a  particular  date
           was intended to be fundamental; for instance,  if  the  contract
           were to include clauses  providing  for  extension  of  time  in
           certain contingencies or for payment  of  fine  or  penalty  for
           every day or week the work undertaken remains unfinished on  the
           expiry of the time provided in the contract such  clauses  would
           be construed as  rendering  ineffective  the  express  provision
           relating to the time being of the essence of contract.”




      19.    The legal principle laid down by this Court in the  above  case
      squarely applies to the facts of this case for the following  reasons.
      In the instant case, undisputedly, the plaintiff did not get Agreement
      of Sale executed by paying the remaining consideration amount  to  the
      defendant Nos. 1-4 within the stipulated period of 7 months as  agreed
      upon by him under Clause 6 of the agreement by  asking  the  defendant
      Nos. 1-4 to get the necessary permission  from  ULCA  and  Income  Tax
      Department  after  paying  the  layout  charges   to   the   concerned
      authorities for getting the sale deed executed  in  his  favour.   The
      plaintiff has not complied with  the  condition  within  the  original
      stipulated period of five months and extended period of two months and
      even if the delay occurs in getting permission from  the  authorities,
      that period was over by July, 1984. It is an undisputed fact that  the
      date of the institution of the original  suit  was  nearly  11  months
      after expiry of the limitation period stipulated in the  agreement  to
      get the sale deed executed in favour of the plaintiff.

      20.  Both the trial court as well as  the  appellate  court  have  not
      examined this important aspect of the case  though  the  parties  have
      agreed to perform their part of contract within seven months from  the
      date of execution of the agreement as stipulated in clause 6.  We have
      considered this aspect of the case on the basis of  the  period  of  7
      months stipulated in the Agreement of Sale and the same is answered in
      favour of the defendants.

      21.  Answer to Point No. 3

           Point No. 3 is also required to be answered in favour of the 5th
      defendant by assigning the following reasons:

           The learned Senior Counsel Mr. P. Vishwanatha  Shetty  appearing
      for the defendant No.5 has placed strong reliance on the  findings  of
      fact recorded by the trial court on the contentious issue Nos. 4 and 5
      in the negative against the plaintiff, by  recording  its  reasons  at
      paragraphs 12 and 13 of the judgment of the trial  court.   Therefore,
      he submits that the said findings of  fact  are  based  on  facts  and
      evidence on record. Further, he placed reliance upon Section 16(c)  of
      the Specific Relief Act, which provision makes  it  mandatory  on  the
      part of the plaintiff to prove his readiness and  willingness  to  get
      the decree for specific performance of the suit schedule  property  in
      his favour.  The learned Senior Counsel for  the  5th  defendant  also
      placed strong reliance upon the judgment of this Court in the case  of
      N.P.Thirugnnam (dead) by Lrs. vs Dr. R. Jagan Mohan Rao & Ors.[11]  in
      support of the findings of the trial court on  the  above  contentious
      issues wherein this Court has held  that  the  court  must  take  into
      consideration the conduct of the plaintiff prior and subsequent to the
      filing of the original suit along with other  attending  circumstances
      and further the amount of consideration which he has  to  pay  to  the
      defendant Nos. 1-4 must be proved by  the  plaintiff.    Further,  the
      plaintiff is required to prove the fact that right from  the  date  of
      execution of the Agreement of Sale till the date of passing the decree
      he must prove that he is ready and has always been willing to  perform
      his part of the contract as per the  agreement.  Further,  he  rightly
      contended the same by placing reliance upon another judgment  of  this
      Court in the case of P.R.Deb & Associates Vs. Sunanda Roy[12]  wherein
      this Court held that the plaintiff in a suit for specific  performance
      must be ready and willing to carry out his part of  the  agreement  at
      all material times.

      22.    The correctness of the findings of fact recorded by  the  trial
      court on the contentious issue Nos. 4 & 5 is examined by us keeping in
      view the law laid down by this Court in the above referred  case  with
      reference to the undisputed facts in the case on hand namely, that the
      letter dated 16.03.1985 sent by the plaintiff would clearly go to show
      that the plaintiff was a defaulter and another letter dated 04.05.1985
      sent by the plaintiff to the defendant Nos.1-4, would go to show  that
      the plaintiff was not  ready  and  willing  to  perform  his  part  of
      contract to purchase the suit schedule property  by  paying  remaining
      sale consideration amount to the defendant Nos.1-4  as  per  the  sale
      agreement as he had been seeking time without justification.  Further,
      the trial court has held that the court has  to  see  conduct  of  the
      party as well as the attending circumstances  of  the  case  regarding
      whether readiness and willingness of the plaintiff can be inferred and
      further the learned trial Judge rightly relied upon the  provision  of
      Section 16(c) of the Specific Relief Act and appreciated  evidence  of
      PW-1, the plaintiff and came to the right conclusion and held that the
      plaintiff had not produced any  document  to  show  that  he  had  the
      balance sale consideration  amount  of  Rs.40,000/-,  to  pay  to  the
      defendant Nos.1-4 to  get  the  sale  deed  executed  in  his  favour.
      Further, there is nothing on record to show that the  plaintiff  could
      have made arrangement for payment of the balance consideration  amount
      to them. But, on the other hand  the  trial  court  has  recorded  the
      finding of fact to the effect  that  the  correspondence  between  the
      parties and other circumstances would  establish  the  fact  that  the
      plaintiff had no money for payment of balance  sale  consideration  to
      the defendant Nos. 1-4 though they demanded the same from him  through
      their legal notices dated 06.03.1985 and 28.03.1985 which notices were
      served upon the plaintiff and despite the same he did not approach the
      defendant Nos.1-4 to get the sale deed executed  in  his  favour  even
      after service of notice, and, prior to issuance of the legal notice to
      him, he never offered to pay the balance consideration as agreed  upon
      by him to them even though defendant Nos. 1-4 have complied  with  all
      the formalities required.  The  learned  Judge,  on  the  question  of
      readiness and willingness on the part of the plaintiff to perform  his
      part of the contract to get the  sale  deed  executed  in  his  favour
      stated that performance of his obligation is mandatory as per  Section
      16 (c) of the Specific Relief Act and the law laid down in this regard
      by this Court which are referred to supra upon which the  trial  court
      has rightly relied upon and answered the  contentious  issues  against
      him by recording valid and cogent reasons.  In view of  the  foregoing
      reasons, we are of the view that the learned trial judge  has  applied
      his mind consciously and correctly to the admitted facts and on proper
      analysis and appreciation, he has correctly recorded  the  finding  of
      fact holding that the plaintiff has failed to perform his part of  the
      contract in paying the remaining sale consideration and  made  sincere
      efforts to get  necessary  permission  from  the  Urban  Land  Ceiling
      Authority and the Income  Tax  Department  by  paying  the  conversion
      charges of the land to get the sale deed executed in his  favour  from
      the defendant Nos. 1-4 within the stipulated time of five  months  and
      further extended  period  of  two  months  as  per  clause  6  of  the
      agreement. The same has been erroneously set aside  by  the  appellate
      court by recording its reasons by placing reliance upon the  judgments
      of this Court in Nirmala Anand’s case (supra), Jawahar Lal Wadhwa  Vs.
      Haripada Chakroberty[13]; and A.Maria Angelena’s case (supra).

      23.   The learned  senior  counsel  has  rightly  submitted  that  the
      findings of fact on issue Nos.4 & 5 have been erroneously set aside by
      the learned Judge of the High Court by recording his reasons which are
      not supported by pleadings and legal evidence on record. The  findings
      of the learned Judge of the High Court are contrary  to  the  admitted
      facts and legal evidence on record.

      24.   We have carefully scrutinised the findings recorded by the trial
      court on the issue Nos.1,3,4 and 5 with reference to the pleadings  of
      the case  and  legal  evidence  on  record  and  the  same  have  been
      erroneously set aside by the learned  Single  Judge  in  the  impugned
      judgment and therefore, the same cannot be allowed to sustain in  law.
             25.   The first appellate court  has  committed  serious  error
      both on facts and in law in reversing the findings of fact recorded on
      the contentious issues by referring to the decisions of this Court  in
      the impugned judgment  on  the  aforesaid  points  which  are  totally
      inapplicable to the fact situation, and has erroneously set aside  the
      findings of fact recorded by the trial court.  Therefore,  we  are  of
      the considered view  that  the  submissions  made  by  learned  Senior
      Counsel on the basis of the findings and reasons recorded by the trial
      court in its judgment are well founded and the same must  be  accepted
      and accordingly we answer the point No. 3 against the plaintiff and in
      favour of the defendant No.5.

      26.  Answer to the Point No.4

            The point No. 4 is also required to be answered in favour of the
      5th defendant for the reason that sale consideration of Rs.48,000/- in
      respect of the suit schedule property has been paid to  the  defendant
      Nos. 1-4 after the termination  of  the  earlier  agreement  with  the
      plaintiff on 10.04.1985 vide notice dated 28.03.1985.  Therefore,  the
      contention urged on behalf of the plaintiff, that 5th defendant is not
      the bona fide purchaser, does not arise at all for the reason that the
      earlier agreement executed in favour of the plaintiff by the defendant
      Nos.1-4 was not subsisting, is the finding recorded by us in answer to
      the point No.1 and we have held that there is termination of Agreement
      of Sale dated 25.12.1983 by letter dated 28.03.1985  sent  to  him  by
      them. Therefore, the findings recorded by the appellate court on  this
      aspect stating that the defendant No.5 is not a  bona  fide  purchaser
      cannot be allowed to sustain.  Accordingly, we set aside the  same  in
      the above aspect.

      27.   Further, the High Court should have considered the relevant  and
      important aspect of the case namely that the plaintiff is entitled  to
      compensation as agreed upon by him under clause 12 of the Agreement of
      Sale which is in favour of defendant Nos. 1-4.  It provides  that  the
      defendant Nos.1-4 have agreed that in the event of  their  failure  to
      comply with  the  terms  of  the  agreement  they  shall  pay  sum  of
      Rs.10,000/- to the plaintiff and also such sum which is spent  by  him
      towards conversion charges and building plan charges.  Similarly,  the
      plaintiff had agreed that in the event of his failure to  comply  with
      the terms of the agreement the defendant  Nos.  1-4  are  entitled  to
      forfeit the advance amount.  This important aspect of the terms of the
      Agreement of Sale has not been noticed by the  learned  Judge  of  the
      High Court while reversing the judgment and decree of the trial  court
      and granted the decree for  specific  performance  in  favour  of  the
      plaintiff in exercise of his discretionary  power  under  sub-sections
      (1) and (2) of Section 20 of the Specific Relief Act. Further, in view
      of the foregoing reasons and statutory provisions of  Sections  16(c),
      20 (1) and (2) and 21(2) of the Specific Relief Act, the plaintiff  is
      not entitled for a decree of specific performance in  respect  of  the
      suit schedule property and also he had lost the right to seek a decree
      of specific performance.

      28.   The learned High Court Judge has gravely erred in reversing  the
      findings of fact recorded on the issue Nos. 3, 4 and 5  by  the  trial
      court in favour of the defendants. He has also  failed  to  take  into
      consideration the very important aspect of the  matter,  namely,  that
      the Agreement of Sale in favour of the plaintiff was terminated and he
      had not sought declaratory relief to declare that the  termination  of
      agreement in the original suit is bad in law and  therefore  the  suit
      for specific performance is not maintainable.  Even assuming  for  the
      sake of argument that agreement was subsisting, the suit for  specific
      performance is not maintainable in law in view of the  breach  of  the
      terms and conditions of the agreement by  the  plaintiff.  Keeping  in
      view the purpose for which the Agreement of Sale was executed and  the
      time stipulated in the agreement as per clause 6 of the agreement, the
      contract should have been complied with within seven months  including
      the extended period and that has not been done by the plaintiff.   The
      findings recorded by the trial court on issue Nos. 4 and  5  and  with
      regard to the readiness and willingness on the part of the  plaintiff,
      the appellate court should  have  exercised  its  discretionary  power
      under sub-sections (1) and (2) of Section 20 of  the  Specific  Relief
      Act, and for this reason also we hold that the grant of the decree for
      specific performance by the High Court in  the  impugned  judgment  is
      wholly unsustainable in law.  The trial court has come  to  the  right
      conclusions on the contentious issues framed by it and has  held  that
      even though Agreement of Sale is proved, the plaintiff is not entitled
      for the decree of specific performance in respect of the suit schedule
      property in view of the findings of fact and reasons recorded  in  the
      contentious issues by it in its judgment and we are in agreement  with
      the same.

      29.   Accordingly, we allow  this  civil  appeal  and  set  aside  the
      impugned judgment and decree of the High Court of Karnataka, Bangalore
      passed in Regular First Appeal No.97  of  2001  dated  08.12.2008  and
      restore the judgment and decree passed by  the  X1th  Additional  City
      Civil Judge, Bangalore City, Bangalore dated 25.09.2000  in  O.S.  No.
      2012 of 1985, but, in the facts and  circumstances  of  the  case,  no
      costs are awarded in these proceedings.




                                       …………………………………………………………J.       [G.S.
                                       SINGHVI]







                                       …………………………………………………………J.
                                       [V. GOPALA GOWDA]

      New Delhi,                                                   August
      29, 2013







      -----------------------
[1]     (1977) 2 SCC 200

[2]     ILR 1993 KAR 427

[3]     (2003)10 SCC 390

[4]     (1996)4 SCC 526

[5]      1987 (Suppl) SCC 340

[6]     (2002) 5 SCC 481

[7]    1961 (3) SCR 579

[8]    (2002) 9 SCC 597

[9]    (2007) 9  SCC 660

[10]   (1993) 1 SCC 519

[11]    (1995) 5 SCC 115

[12]   (1996) 4 SCC 423

[13]    (1989) 1 SCC 76



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