specific performance = four suits for specific performance of the agreements of sale dated 20.03.1991 and Memoranda of Understanding (MOU) dated 24.01.1994. In addition, the Appellants prayed for a direction to the Respondents to deliver vacant possession of the schedule property, a decree of permanent injunction restraining the Respondents from alienating or encumbering the suit property and a decree of mandatory injunction to deposit the title deeds with the Court.=As per the terms of the agreement, the sale was to be concluded within a period of four months. The Respondents would produce the encumbrance certificate much before the execution and registration of the sale deeds. The Respondents should also obtain the income tax clearance certificate under Section 230-A of the Income Tax Act, 1961. To comply with the obligation stipulated in the agreement, the first Respondent applied to the Income Tax authorities for permission to alienate the property. The Income Tax authorities passed an order for compulsory acquisition of property on 25.06.1991.=A suit for specific performance cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where an immovable property is to be sold within a certain period, time being of the essence, and it is not found that owing to some default on the part of the plaintiff, the sale could not take place within the stipulated time. Once a suit for specific performance has been filed, any delay as a result of the Court process cannot be put against the plaintiff as a matter of law in decreeing specific performance. However, it is within the discretion of the Court, regard being had to the facts of each case, as to whether some additional amount ought or ought not to be paid by the plaintiff once a decree of specific performance is passed in its favour even at the appellate stage6 . We are in agreement with the Appellants that they did not file the civil suits immediately after the disposal of the Writ Petition in 1998 due to the pendency of Writ Appeals. Escalation of prices cannot be the sole ground to deny specific performance7 . We are of the considered view that the Respondents are not entitled for any additional amount as 90 per cent of the sale consideration was paid by the Appellants before 1994. It is not necessary for us to deal with the submission of the Appellants regarding the applicability of the amendment to the Specific Relief Act, 1963, in view of the conclusion that we have reached in favour of the Appellants.
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos.3523-3526 of 2010
A.R. MADANA GOPAL ETC.ETC.
.... Appellant(s)
Versus
M/S RAMNATH PUBLICATIONS PVT. LTD. AND ANR.
…. Respondent (s)
J U D G M E N T
L. NAGESWARA RAO, J.
1. These Appeals are filed against the judgment of the Division
Bench of the Madras High Court by which a decree for specific
performance passed by the learned Single Judge was reversed.
2. The Appellants filed four suits for specific performance of
the agreements of sale dated 20.03.1991 and Memoranda of
Understanding (MOU) dated 24.01.1994. In addition, the
Appellants prayed for a direction to the Respondents to deliver
vacant possession of the schedule property, a decree of
permanent injunction restraining the Respondents from alienating
or encumbering the suit property and a decree of mandatory
injunction to deposit the title deeds with the Court. It was alleged
in the plaints that the Respondent entered into separate
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agreements with the Appellants who belong to the same family for
sale of property situated at Door No.325, Arcot Road, Vadapalani,
Chennai on 20.03.1991. As per the terms of the agreement, the
sale was to be concluded within a period of four months. The
Respondents would produce the encumbrance certificate much
before the execution and registration of the sale deeds. The
Respondents should also obtain the income tax clearance
certificate under Section 230-A of the Income Tax Act, 1961. To
comply with the obligation stipulated in the agreement, the first
Respondent applied to the Income Tax authorities for permission
to alienate the property. The Income Tax authorities passed an
order for compulsory acquisition of property on 25.06.1991.
3. The Writ Petition filed by the Respondents challenging the
order of the Income Tax authority was allowed by the Madras High
Court by its judgment dated 21.12.1992. The authorities were
directed to reconsider the matter afresh. The Income Tax
authorities passed another order on 22.02.1993 directing
purchase of the property. The said order was challenged in the
High Court and an interim order of injunction was passed on
10.03.1993. The parties were directed to maintain status quo and
not to change the nature of the property. In view of the
developments after the agreements relating to the orders passed
by the Income Tax authorities and the pendency of the Writ
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Petitions challenging those orders, the Appellants and the
Respondents entered into four separate MOUs on 24.01.1994.
The recitals of the MOUs would show that they were in addition
and not in substitution of the agreements dated 20.03.1991. It
was agreed that the Respondents shall continue to keep the
original title deeds until completion of the sale by registration of
the sale deeds. The original title deeds would be handed over to
the Appellants at the time of registration. It was also recorded in
the Memorandum that certain amounts were paid by the
Appellants and the balance of the sale price shall be paid to the
Respondents at the time of registration of the sale deeds
immediately after the disposal of the Writ Petitions in their favour.
4. The Writ Petitions filed against the compulsory acquisition
by the Income Tax authorities were disposed of on 11.09.1998.
The judgment of the learned Single Judge of the High Court
allowing the Writ Petitions was challenged by the Income Tax
department by way of filing of an appeal. When the Appellants
made a demand for execution of sale deeds, the Respondents
informed them that it can be done only after disposal of the Writ
Appeal. Indian Bank filed a suit for recovery of its dues from the
Respondents. As the Respondents were not executing the sale
deeds in spite of repeated requests, the Appellants filed separate
suits for specific performance.
3 | P a g e
5. In the written statement filed by the Respondents, it was
submitted that the MOU dated 22.01.1994 substituted the suit
agreements dated 20.03.1991. It was contended on behalf of the
Respondents that the suit was time barred. Time was the
essence of the agreement dated 20.03.1991 as it was agreed
between the parties that the sale should be concluded within a
period of four months. Though, the Writ Petition filed against the
order of the Income Tax Department was allowed in the year 1998,
the Appellants maintained silence for more than two years before
filing the suits in 2000 which clearly shows that they were neither
ready nor willing to perform their part of the agreement.
6. All the four suits were tried together and a learned Single
Judge of the High Court decreed the suits on 17.07.2003. The
Appellants were directed to deposit the balance sale consideration
along with interest at the rate of 12 per cent within eight weeks
from the date of decree and upon such deposit, the Respondents
were directed to execute the sale deeds in favour of the
Appellants. Thereafter, the Respondents were directed to deliver
possession of the property to the Appellants. The Appellants
deposited the balance consideration on 01.08.2003. The
Respondents filed original suit appeals against the judgment of
the learned Single Judge which were allowed by a Division Bench
of the High Court on 25.07.2008. The judgment of the Division
4 | P a g e
Bench setting aside the decrees passed in favour of the Appellants
is the subject matter in the present Appeals.
7. While decreeing the suit filed by the Appellants, the learned
Single Judge of the High Court expressed his opinion that it cannot
be said that the Appellants did not evince any interest in
performing their part of the agreement nor can it be said that they
did not have sufficient funds. It was further held that the
Appellants were always ready and willing to perform their part of
the contract by depositing the balance sale consideration. He
further observed that the major portion of the sale consideration
was already paid. According to the learned Single Judge, the suit
was filed within a period of three years from the date of the
disposal of the Writ Petitions and therefore, cannot be said to be
barred by limitation. The MOUs dated 24.01.1994 were held to be
in addition to the agreements dated 20.03.1991. On the above
findings, the learned Single Judge decreed the suit. The relief
claimed by the Appellants for award of damages was, however,
not granted. The learned Single Judge awarded interest on the
balance sale consideration at the rate of 12 per cent.
8. A Division Bench of the High Court set aside the judgment
and decree of the learned Single Judge by holding that the
Appellants failed to deposit the balance consideration immediately
after the disposal of the Writ Petition. Though, the Writ Petition
5 | P a g e
was disposed of on 11.09.1998, the suits were filed between
October to December, 2000. No notices were issued by the
Appellants seeking execution of sale deeds nor did they purchase
the stamp papers. According to the Division Bench the above
factors would indicate that the Appellants were not ready and
willing to perform their part of the agreement along with the fact
that they kept quiet for two years and three months after the
disposal of the Writ Petitions. That apart, conduct of the
Appellants was commented upon by the Division Bench of the
High Court to conclude that they are not entitled to the relief of
specific performance. The Division Bench found fault with the
Appellants for not pleading and proving how they got the
possession of a part of the property. The claim of the Appellants
for vacant possession of the property was found to be frivolous as
the Appellants continued to be in possession of a part of the
property. The attempt made by the Appellants to trespass into
the ground floor of the property where the Indian Bank was having
its office disentitled them from seeking the equitable relief of
specific performance.
9. We have heard Mr. Raghavendra S. Srivatsa, Advocate for
the Appellants and Mr. P.S. Narasimha, learned Senior Counsel for
the Respondents. The contention of the Appellants is that the
agreements and the MOUs have to be read together. It was
6 | P a g e
argued on behalf of the Appellants that the sale consideration of
all the four agreements for purchase of the property is Rs. 37/-
lakhs out of which Rs. 34/- lakhs was paid by August, 1994. Mr.
Srivatsa, submitted that the demand made by the Appellants for
execution of the sale deeds was rejected by the Respondents on
the ground that the Writ Appeal filed by the Income Tax
Department against the judgment of the High Court dated
11.09.1998 was pending. It was only on receipt of information by
the Appellants that the property was already encumbered, that
the Appellants filed suits for specific performance. According to
the Appellants, it cannot be said that there was any delay in filing
the suits. The Appellants were always ready and willing to
perform their part of the agreement. The Appellants asserted that
the interpretation of the MOU is contrary to well settled law of this
Court. The Division Bench of the High Court placed undue
emphasis on the word “immediately” to conclude that the
Appellants failed to pay the balance consideration immediately
after the disposal of the Writ Petition. By placing reliance on the
judgments of this Court in State of Bihar v. Tata Iron
1
, Anglo
American Metallurgical Coal Pty Ltd. v. MMTC Ltd.
2 and
Khardah Company Ltd. v. Raymon & Co. (India) Private
Limited
3
, Mr. Srivatsa submitted that the intention of the parties
1 (2019) 7 SCC 99
2 2020 SCC OnLine SC 1030
3 (1963) 3 SCR 183
7 | P a g e
must be ascertained from the language used in the agreement by
reading it as a whole and in the light of the surrounding
circumstances. He submitted that the relevant clause in the
agreement obligates the Appellants to pay the balance sale
consideration at the time of registration of sale deeds,
immediately after the disposal of the Writ Petition. According to
Mr. Srivatsa, the High Court ignored the crucial words “at the time
of registration of the sale deeds” and committed an error in
relying upon the word “immediately” to find that the Appellants
were in default. The pendency of the Writ Appeal filed by the
Income Tax Department was the reason for the Appellants not
taking any steps to file the suits immediately after the disposal of
the Writ Petitions. Seeking support from the judgments of this
Court in K.S.Vidyanadam and Others v. Vairavan
4 and
Saradamani Kandappan v. S. Rajalakshmi
5
, Mr. Srivatsa
contended that the Appellants are entitled for the relief of specific
performance as they have paid a major portion of the
consideration, possession in part was handed over to them and
the suit was filed within the period of limitation. It was further
submitted on behalf of the Appellants that specific performance is
no longer a discretionary relief in view of the insertion of Section
10-A in the Specific Relief Act, 1963. It was argued that the
4 (1997) 3 SCC 1
5 (2011) 12 SCC 18
8 | P a g e
amendment should be made applicable to all pending proceedings
including appeals.
10. Mr. Narasimha, learned Senior Counsel for the Respondents
contended that time is the essence of the agreements dated
20.03.1991 and the MOUs dated 24.01.1994. Though, the Writ
Petitions were disposed of on 11.09.1998, the Appellants filed the
suit only between October and December, 2000. The Appellants
had not issued any notices to the Respondents to execute sale
deeds after the disposal of the Writ Petitions. The Appellants also
did not discharge their obligation of paying balance sale
consideration. The delay of two years and three months after the
disposal of the Writ Petition is fatal and the Appellants are not
entitled for the relief claimed for. It was argued on behalf of the
Respondents that the escalation in prices of properties in Chennai
is a relevant factor. Mr. Narasimha, supported the judgment of
the Division Bench of the High Court by arguing that the
Appellants were not put in possession of the property at the time
of the agreement. There is no covenant in the MOU that the
possession shall be given to the Appellants. The Appellants have
not explained as to how they got possession of the first floor. The
Appellants highhandedly made attempts to disturb the possession
of the Indian Bank from a portion of the building. As the First
Appellate Court is the last Court on findings of fact, this Court
9 | P a g e
should refrain from interfering with the judgment of the Division
Bench of the High Court.
11. There is no dispute about the agreements dated 20.03.1991
and the MOUs between the parties. It is also a fact that Income
Tax Department wanted to compulsorily acquire the property, due
to which Writ Petitions were filed which were disposed of on
11.09.1998. Writ Appeals filed by the Department were pending
on the date of filing of the suit. The relevant clause in the MOU is
that the Appellants shall pay the balance sale consideration at the
time of registration of sale deeds immediately after the disposal of
the Writ Petition. The Division Bench of the High Court in the
impugned judgment held that the Appellants were not ready and
willing to perform their part of the agreement by not depositing
the balance sale consideration immediately after the disposal of
the Writ Petition. The High Court lost sight of the words “at the
time of registration of sale” in clause 3 of MOUs. A plain reading
of clause 3 in the MOU’s would show that the Appellants were
required to pay the balance sale consideration at the time of the
registration of the sale deeds immediately when the Writ Petition
is disposed of upholding the sale agreement. The High Court
further found fault with the Appellants in waiting for 2 years and 3
months after the disposal of the Writ Petition for filing the suits.
The High Court refused to grant relief of specific performance to
10 | P a g e
the Appellants on the ground that there was total inaction on the
part of the Appellants for more than two years after the parties
entered into the MOU. Though, it was pleaded by the Appellants
in the suits that they were always ready and willing to perform
their part of the agreement, the High Court was of the opinion that
they did not prove the same as they did not pay the balance sale
consideration immediately after the disposal of the Writ petition.
We find force in the submission made on behalf of the Appellants
that payment of balance consideration has to be done only at the
time of the registration of the sale deeds. Admittedly, no steps
were taken for the registration of the sale deeds. The finding of
the Division Bench of the High Court that the Appellants were not
ready and willing to perform their part of the contract by not
paying the balance consideration immediately after disposal of the
Writ Petition is erroneous.
12. The Division Bench of the High Court agreed with the
contention of the Appellants that mere fixation of time within
which the contract was to be performed does not make the
stipulation as to time being of the essence of the contract.
However, the Appellants were found guilty of total inaction on
their part. The sole ground for denial of relief to the Appellants is
non payment of balance consideration immediately after disposal
11 | P a g e
of the Writ Petition. The said conclusion is the result of a faulty
interpretation of clause 3 of the MOUs as stated earlier.
13. The High Court highlighted the conduct of the Appellants to
deny relief. The failure of the Appellants in not pleading and
proving how they were put in possession of a part of the property,
the frivolous complaint about vacant possession not being given
by the Respondents and the attempt made by the Appellants to
take forcible possession of a part of the property were commented
upon to hold that the Appellants were disentitled to equitable
relief. There is not dispute that the Appellants were in possession
of the first floor of the property. Details about the manner in
which possession was given to the Appellants not being pleaded
cannot be a ground to deny relief. The contention of the
Appellants before the High Court was that the Respondents should
demolish the super structure and hand over vacant possession of
the land. The High Court observed that the Appellants who were in
possession of a part of the property cannot make such an inane
plea. According to the terms of the agreement, the Respondents
had to hand over vacant possession of the land. The Appellants
submitted that no steps were taken to demolish the structure to
highlight the inaction on the part of the Respondents. By no
stretch of imagination, can it be said that the Appellants can be
denied relief on this account. Yet another reason given by the
12 | P a g e
Division Bench of the High Court is that the Appellants made an
attempt to trespass into the ground floor where the Indian Bank
was a tenant. The contention of the Appellants is that the Indian
Bank was not a tenant in the ground floor but only a creditor of
the Respondents. Admittedly, the Indian Bank sued the
Respondents for recovery of the loan by the sale of the
hypothecated goods stored in the ground floor. It was also
contended on behalf of the Appellants that a police complaint was
preferred by them against the Respondents for causing
disturbance to their possession. The Appellants cannot be said to
be disentitled for a relief of specific performance on the ground
that their conduct on this count is blameworthy.
14. A suit for specific performance cannot be dismissed on the
sole ground of delay or laches. However, an exception to this rule
is where an immovable property is to be sold within a certain
period, time being of the essence, and it is not found that owing to
some default on the part of the plaintiff, the sale could not take
place within the stipulated time. Once a suit for specific
performance has been filed, any delay as a result of the Court
process cannot be put against the plaintiff as a matter of law in
decreeing specific performance. However, it is within the
discretion of the Court, regard being had to the facts of each case,
as to whether some additional amount ought or ought not to be
13 | P a g e
paid by the plaintiff once a decree of specific performance is
passed in its favour even at the appellate stage6
. We are in
agreement with the Appellants that they did not file the civil suits
immediately after the disposal of the Writ Petition in 1998 due to
the pendency of Writ Appeals. Escalation of prices cannot be the
sole ground to deny specific performance7
. We are of the
considered view that the Respondents are not entitled for any
additional amount as 90 per cent of the sale consideration was
paid by the Appellants before 1994. It is not necessary for us to
deal with the submission of the Appellants regarding the
applicability of the amendment to the Specific Relief Act, 1963, in
view of the conclusion that we have reached in favour of the
Appellants.
15. For the aforementioned reasons, the judgment of the
Division Bench of the High Court is set aside and the judgment
and decree passed by the learned Single Judge is restored. The
Appeals are allowed, accordingly.
................................J.
[L. NAGESWARA RAO]
...............................J.
[S. RAVINDRA BHAT]
New Delhi,
April 09, 2021
6 Ferrodous Estates (Pvt) Ltd. v. P. Gopirathnam (Dead) and Others, 2020 SCC OnLine
SC 825
7 Nirmala Anand v. Advent Corpn. (P) Ltd ., (2002) 8 SCC 146
14 | P a g e
