Supreme Court of India
L.S. SIKANDAR (D) BY LRS. & ORS.versusK. SUBRAMANI & ORS.
- Citation
- 2013 INSC 577
- Decided
- 29 August 2013
Holding
Since the agreement of sale was terminated by notice and the plaintiff failed to perform within the time stipulated, the suit for specific performance was not maintainable and the decree for specific performance was set aside.
Summary
The plaintiff sought specific performance of a 1983 agreement of sale and a permanent injunction, but the agreement had been terminated by a notice on 28‑03‑1985 after the plaintiff failed to pay the balance consideration and obtain required permissions within the stipulated five‑month period (extendable by two months). The trial court held the plaintiff was in default and refused specific performance; the High Court reversed this, granting the decree. The Supreme Court held that because the agreement was terminated and the plaintiff was not ready and willing to perform, the suit for specific performance was not maintainable, the High Court erred in exercising its discretion, and the trial court's decree was restored. The appeal was allowed, setting aside the High Court judgment.
Issues considered
- Whether the original suit for specific performance, filed without seeking declaratory relief regarding the termination of the agreement of sale, is maintainable in law.
- Whether the High Court's reversal of the trial court's findings on issues concerning the 5th defendant's title, the plaintiff's default, and readiness and willingness, and its grant of specific performance, is legally valid.
- Whether the grant of specific performance is permissible despite Clause 12 of the agreement of sale.
- Whether the decree conforms with Sections 20(1) and 20(2) of the Specific Relief Act and whether the High Court exercised its discretionary power reasonably.
- What decree or order should be passed in the present case.
Legislation cited
- Indian Contract Act, 1872s. 55
- Specific Relief Act, 1963s. 16(c), s. 20(1), s. 20(2), s. 21(2)
- Transfer of Property Act, 1882s. 53-A
Subjects
Specific performanceSpecific Relief ActAgreement of saleTermination of contractTime is of the essenceDiscretionary power of courtDecreeInjunction
Judgment
[2013] 17 S.C.R. 24
A l.S. SIKANDAR (0) BY LRS. & ORS.
v.
K. SUBRAMANI & ORS.
(Civil Appeal No. 7306 of 2013)
B AUGUST 29, 2013
[G.S. SINGHVI AND V. GOPALA GOWDA, JJ.]
Specific Relief Act, 1963- ss. 16(c) and 20- Decree of specific
performance - Grant of- Discretionary power of Court- Court to
c see conduct of the party as well as the attending circumstances of
the case - Suit for specific petiormance of the agreement of sale
and for grant of decree of permanent injunction - Trial court held
that 5th defendant was owner of the suit property pursuant to sale
.deed in question and was entitled to take possession of the same
from the plaintiff-- High Court ri;;versed the decree, granting decree ·
D for specific petiormance of the agreement of Sale in favour of
respondent No. 1/plaintiff in relation to the suit property- Further, it
granted decree of permanent injunction against the defendants
restraining them from intetiering with respondent No. 1/plaintiff's
peaceful possession and enjoyment of the suit property- On appeal,
E held: High Court 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
was bad in law and therefore the suit for specific petiormance was
not maintainable - Even assuming for the sake of argument that
F the agreement was subsisting, the suit for specific petiormance
was 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
G contract should have been complied with, within seven months
inC!uding the extended period but that was not done by the plaintiff
- The plaintiff failed to petiorm his part of the contract- The plaintiff
was a defaulter and was not ready and willing to petiorm his part of
contract to purchase the suit property by paying remaining sate·
consideration amount to defendant Nos. 1-4 as per the sale
H 24
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 25
ORS.
agreement and had been seeking time without justification - Grant A •
of decree for specific performance by the High Court therefore
wholly unsustainable in law.
In a suit filed by plaintiff/respondent for specific
performance of agreement of sale and for grant of decree of
permanent injunction, the trial court framed six issues: 1) B
Whether the plaintiff proved that defendant Nos.1-4 executed
Agreement of Sale dated 25.12.1983 and delivered possession
of the same; 2) Whether the plaintiff proved that he was in
lawful possession of the suit property; 3) Whether the 5th
defendant proved that he purchased the property under sale
deed dated 30.05.1985 and was in possession of it; 4) Whether C
plaintiff was always ready and willing to perform his part ofthe
obligation; 5) Whether the 5th defendant proved that plaintiff
was the defaulter and not ready and willing to perform his
part of the obligation and 6) Whether the defendant proved
that plaintiff put up construction after the completion of the D
sale.
On appreciation of the pleadings, documentary and oral
evidence on record, the trial court recorded the findings of
fact in the affirmative on issue Nos .. 1, 2 and 5 and answered
issue No.3 partly in affirmative and issue Nos. 4 and 6 in the E
negative. The trial court in its judgment recorded the finding
of fact holding that 5th defendant was the owner of the suit
property pursuant to sale deed dated 30.05.1985 and he was
entitled to take possession of the same from the plaintiff in
accordance with law and accordingly, partly decreed the suit
in his favour. F
Aggrieved by the judgment and decree, the plaintiff
preferred appeal before the High Court and prayed to set
aside the same insofar 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 was concerned. The High G
court 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; and (iii) On-issue Nos. 4 & 5 H
;c··,.'. ·);
26 SUPREME COURT REPORTS [2013] 17 S.C.R.
A - whether the 5th defendant proved the plaintiff to be a
defaulter, who was not ready and willing to perform his part of
the obligation. The High Court in exercise of its appellate
jurisdiction 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)
8
of Section 20 regarding discretionary power to be exercised
by the court for grant of a decree of specific performance in
his favour. The High Court reversed the judgment and decree
passed in the Original Suit by the trial court and modified the
decree by allowing the appeal, granting the decree for specific
C performance of the agreement of Sale in favour of the
respondent No.1/plaintiff in relation to the suit schedule·
property. Further, it 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.
0
In the instant appeal, the following questions arose 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 resp_ect
E to termination of the Agreement of Sale vide notice dated
28.3.1985, rescinding the contract, was 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
F granting the decree for specific performance in favour of the
plaintiff in respect of the schedule property was 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 was legal and valid; (4) Whether the
grant of the decree was in conformity with sub-sections (1)
G and (2) of Section 20 of the Specific Relief Act and whether
the Judge of the High Court exercised his discretionary power
reasonably in granting the same in favour of the plaintiff and
5) What decree or order to be passed?
Allowing the appeal, the Court
H
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 27
ORS.
HELD: A
Answer to point no.1
1. 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 8
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 c
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 D
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 E
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 F
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 G
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
H
28 SUPREME'COURT REPORTS [2013] 17 S.C.R.
A 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
8
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.
C 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 thE1
basis of Agreement of Sale and consequential relief of decree
for permanent injunction is not maintainable in law. Therefore,
the relief sought for by the plaintiff for grant of decree for
0 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. [Para 17] [44-D-H; 45-A-F]
E Sukhbir Singh & Ors. Vs. Brij Pal Singh & Ors. (1977) 2 SCC
200; Manjunath Anandappa Vs. Tammanasa (2003) 10 SCC 390:
2003 (2) SCR 1068; His Holyness Acharya Swamy Ganesh Dassji
Vs. Shri Sita Ram Thapar(1996)4 SCC 526: 1996 (2) Suppl. SC Rt
111; Parakunnan Veetil/ Joseph's son Mathew Vs. Nedumbara
F Kuruvila's son & Ors. 1987 (Suppl) SCC 340; International
Contractors Ltd. Vs. Prasanta Kumar Sur (Deceased) & Ors. 1961
(3) SCR 579; MMS Investments, Madurai & Ors. Vs. V. Veerappan
& Ors. (2007) 9 SCC 660: 2007 (5) SCR 32 - referred to.
Saraswathi Ammal Vs. V.C. Lingam ILR 1993 KAR 427 -
G referred to.
Answer to point no.2
2. Even if one assumes that the Agreement of Sale dated
25.12.1983 is subsisting, one has to answer point No. 2 in
favour of defendant No.5. In the instant case, undisputedly,
H the plaintiff did not getAgreement of Sale executed by paying
1.S. SIKAl\IDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 29
ORS.
the remaining consideration amount to the defendant Nos. 1- A
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 B
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 C
of the limitation period stipulated in the agreement to get the '
sale deed executed in favour of the plaintiff. Both the trial
court as well as the appellate court have not examined this
im~ortant 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. D
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 a-9reement to perform their part of the contract,
then time is the essence of the contract and parties shall
adhere to the same. This aspect of the case on the basis of E
the period of 7 months stipulated in the Agreement of Sale is
answered in favour of the defendants. [Paras 180 19, 20] [45-
G; 49-A-E]
Smt.Chand Rani (dead) byLRs. Vs. Smt. Kamal Rani(dead)
by LRs. (1993) 1 sec 519: 1992 (3) Suppl. SCR 798 - held F
applicable.
Answer to Point No. 3
3.1. Point No.3 is also required to be answered in favour
of the 5th defendant. The letter dated 16.03.1985 sent by the
plaintiff would clearly go to show that the plaintiff was a G
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 H
30 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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 trial
Judge rightly relied upon the provision of Section 16(c) of the
8
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
C 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
0 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
E 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 thein even though defendant Nos.1-4 have complied
with all the formalities required. The trial Judge, on the
question of readiness and willingness on the part of the
F 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 the trial court has rightly relied upon and answered the
G contentious issues against him by recording valid and cogent
reasons. In view of the foregoing reasons, the 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 offact holding that the plaintiff has failed
to perform his part of the contract in paying the remaining
H sale consideration and made sincere efforts to get necessary
1.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 31
ORS.
permission from the Urban Land Ceiling Authority and the A
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 ~side by
the appellate court. [Para 21and22] [49-F, 50-E-G, 51-A-H] B
3.2. The findings recorded by the trial court on the issue
Nos.1,3,4 and 5 have been erroneously set aside by the Single
Judge in the impugned judgment and therefore, the same
cannot be allowed to sustain in law. The first appellate court
committed serious error both on facts and in law in reversing C
the findings offact recorded on the contentious issues, and
erroneously set aside the findings of fact recorded by the trial
court. Therefore, the point No. 3 is answered against the
plaintiff and in favour of the defendant No.5. [Paras 24, 25]
[52-C-E] D
N.P. Thirugnnam (dead) by Lrs. vs Dr. R. Jagan Mohan Rao
& Ors. (1995) 5 SCC 115: 1995 (2) Suppl. SCR 53; P.R.Deb·&
Associates Vs. Sunanda Roy (1996) 4 SCC 423: 1996 (3) SCR
163- relied on.
Nirmala Anand Vs. Advent Corporation Pvt. Limit~d & Ors. E
(2002) 5 SCC 481; Jawahar Lal Wadhwa Vs. Haripada Chakroberty
(1989) 1 SCC 76: 1988 (3) Suppl. SCR 513 and A. Maria Angelena
Vs. A.G. Balkis Bee (2002) 9 SCC 597 - referred to.
Answer to the Point No.4
F
4.1. 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 G
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 this Court in answer to the point No.1 and H
32 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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. [Para 26] [52-F-H; 53-A-B]
B 4.2. Further, the High Court sh_ould have consiaered 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-
C 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.
D 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 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
E 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
of
entitled for a decree specific performance_ in respect of the
suit schedule property and also he had lost the right to seek
F a decree of specific performance. [Para 27] [53-B-F]
5. The High Court 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 also failed to take into
consideration the very important aspect of the matter, namely,
G 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
H is not maintainable in law in view of the breach of the terms
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 33
ORS.
and conditions of the agreement by the plaintiff. Keeping in A
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
B
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, the
grant of the decree for specific performance by the High Court C
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 0
contentious issues by it in its judgment and this Court is in
agreement with the same. Accordingly, the impugned judgment
and decree of the High Court is set aside and the judgment
and decree passed by the trial court is restored. [Paras 28, 29]
[53-F-H; 54-A-E] E
Case Law Reference:
(1977) 2 sec 200 referred to Para 10
ILR 1993 KAR427 referred to Para 12
2003 (2) SCR 1068 referred to Para 12 F
1996 (2) Suppl. SCR 111 referred to Para 12
1987 (Suppl) sec 340 referred to Para 15
(2002) 5 sec 481 referred to Para 15
1961 (3) SCR 579 referred to Para 16 G
(2002) 9 sec 597 referred to Para 16
2007 (5) SCR 32 referred to Para 16
1992 (3) Suppl. SCR 798 held applicable Para 18
H
34 SUPREME COURT REPORTS [2013) 17 S.C.R.
A 1995 (2) Suppl. SCR 53 relied on Para 21
1996 (3) SCR 163 relied on Para 21
1988 (3) Suppl. SCR 513 referred to Para23
CIVIL AP PELLATE JURISDICTION : Civil Appeal No. 7306 of
B 2013,
From the Judgment and Order dateq08.12.2008 of the High
Court of Karnataka, Banglore in Regular First Appeal No. 97 of
2001.
P. Vishwanatha Shetty, Vijay Kumar Paradesi for the
C Appellants.
Deb Jyoti Basu for the Respondents.
The Judgment of the Court was delivered by
V. GO PALA GOWDA, J. : 1. Leave granted.
D
2. This civil appeal is directed against the judgment and order
dated 08.12.2008 passed in Regular First Appeal No. 97 of2001 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
E 1985 dated 25.09.2000 by the X1 th 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 injuni::tion against the defendants restraining them from
F
interfering with the respondent No.1 /plaintiffs 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
G 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
H
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 35
ORS. [V. GO PALA GOWDA, J.]
of exhibits in the judgments of the trial court as well as of the High A
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 B
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 C
Agrahara Thimmasandra village, known as C.K. Chinnappa Garden,
Bangalore North Taluk, within the territorial jurisdiction of the Bruhat
Bangalore Mahanagara Pa like (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 0
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 E
· 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 nanies from that of the deceased husband F
of the first defendant in the property register maintained by the
BBMP atthe 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 G
by two months in case of delay in securing the permission from the
above referred authorities which might in tum cause delay in payment
of the conversion charges. ·
4. It is the case of the plaintiff that on being put in possession
H
36 SUPREME COURT REPORTS [2013) 17 S.C.R.
A 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.
B
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
C 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-
D 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
E to return the original documents of suit property given to him at the
lime of execution of the Agreement of Sale and on his failure to do
so on or before 10.04.1985, the said a::Jreement dated 25.12.1983
would stand terminated vide the aforesaid notice.
6. After institution of the original suit by the plaintiff for specific
F 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,. a11d
therefore they were placed ex-parte. An interlocutory application
was filed by the appellant to implead himself as 5th defendant to the
G 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 3·0.05.1985
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 su1t proceedings and
H
1.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 37
ORS. [V. GOPALA GOWDA, J.]
he resisted the suit by filing a written statement dated 13.12.1989, A
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 beirig 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
8
necessary permission from the competent authority under the U LCR
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 c
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 D
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 E
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 F
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 G
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 H
38 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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
B 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
c 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 &s· without
D appreciating the plaint averments and the evidence on record havirig
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
E
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
F Nos.1-4 in respect of the suit schedule property as agreed upon by
him in the agreement. He further contended that the tria! 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
G 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,
H to pay the balance sale consideration amount to defendant Nos. 1-
1.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 39
ORS. [V. GO PALA GOWDA, J.]
· 4 on execution of the deed of conveyance of the suit property. He A
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 B
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 c
under the ULCR Act and Income Tax Department to convey the suit
property in fayour 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 D
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 cou·nsel has placed reliance on the reported decision of
this Court in Sukhbir Singh & Ors. Vs. Brij Pal Singh & Ors'. It is E
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 F
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 G
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
1. (1977J 2 sec 200. H
40 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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
8
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
C 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
D 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 lo 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
E 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
F 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
G 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 Ho/yness Acharya Swamy Ganesh Oassji Vs. Shri Sita
2. ILR 1993 KAR 427.
H 3. (2003)10 sec 390.
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 41
ORS. [V. GOPALA GOWDA, J.]
Ram Thapar4, in justification of the findings and reasons recorded A
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 8
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 c
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 0
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 E
judicial principles and capable of correction by the court of appeal.
15. He has referred to the judgment in the case of Parakunnan
Veetill Joseph's son Mathew Vs. Nedumbara Kuruvi/a's son & Ors5.
, 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 F
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
& Ors6• , wherein this Court has held that specific performance is
an equitable relief and the Court has to strike a balance of equities G
4. (1996)4 sec 526.
5. 1987 (Suppl) sec 340
6. (2002) 5 sec 481 H
42 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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
B 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
c part of the contract. It is further held that once a party to a contract
has repudiated the contract, it is not necessary forthe 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
D
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•, 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
E 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
F 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-pa rte, and therefore, the plea of the 5th defendant that
the plaintiff must always be ready and willing to perform his part of
G 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
7. 1961 (3) SCR 579
H s. (2002) 9 sec 597
l.S. SIKANDAR (0) BY LRS. & ORS. v. K. SUBRAMANI & 43
ORS. [V. GOPALA GOWDA, J.]
contract between the plaintiff and defendant Nos. 1-4, as per A
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•. 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 B
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 C
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
0
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 E
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, F
the following points would aris.e 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 G
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
9. 2007) g sec 660. H
44 SUPREME COURT REPORTS (2013] 17 S.C.R.
A 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
plaintiffin respect of the.schedule property is legal and valid?
(3) Whether the grant of decree of specific performance in
B 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
c 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
0 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
E 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
F 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
G 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 offive 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
H same, the defendant Nos. 1-4 got issued legal notice dated
-
1.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 45
ORS. [V. GOPALA GOWDA, J.]
06.03.1985 to the plaintiff pointing out that he has failed to perform A
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 B
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 C
10.04.1985, and on failure to comply with the same, theAgreement
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
0
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 E
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 F
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
G
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:-
ltwould be very much relevant for us to extract Clause 6 of the
Agreement of Sale which reads thus: H
46 SUPREME COURT REPORTS (2013] 17 S.C.R.
A "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 offive months at the cost and expenses
B
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
c 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
o Bench judgment in Smt. Chand Rani (dead) by LRs. Vs. Smt. Kamal
Rani(dead) by LRs' 0 . ; 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
agree9 to a specified time in the agreement to perform their part of
the contract, then time is the essence of the contract and parties
E shall adhere to the same.
To emphasize the fact that time is the essence of the contract
before the High Court, the counsel forthe 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:
F
"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 µrinciple is not in any way
different from that obtainable in England. Under the law of
G 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
H 10. (1993) 1 sec 519.
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 47
ORS. [V. GOPALA GOWDA, J.]
parties named a specific time within which completion was to A
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 B
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 c
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 D
which the thing to be d'one 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 E
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 F
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 G
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 H
regards contracts for sale of land."
48 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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
B 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.
c 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
D 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
E 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.'
F
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
G inference that the completion of the work by a particular date
was intended to be fundamental; for instance, ifthe 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
H of the time provided in the contract such clauses would be
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 49
ORS. [V. GOPALA GOWDA, J.]
construed as rendering ineffective the express prO)lision A
relating to the time being of the essence of contract."
.19: The legal principle laid down by this Court in the above
case sqµarely 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 B
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 c
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 D
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 E
the d·ate 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 F
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 G
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
H
50 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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 th is
Court in the case of NP. Thirugnnam (dead) by Lrs. vs Dr. R.
Jagan Mohan Rao & Ors 11 • in support of the findings of the trial
B 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
c the plaintiff. Further, the plaintiff is required to prove the fact that
right from the date of execution of the Agreement of Sale till thedate
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 PR.Deb
D & Associates Vs. Sunanda Roy12 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
E 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
F 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
G 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
11. (1995) 5 sec 115
H 12. (1996) 4 sec 423
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 51
ORS. [V. GOPALA GOWDA, J.)
appreciated evidence of PW-1, the plaintiff and came to the right A
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 defendantNos.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 B
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 tb the defendant Nos. 1-4 though they
demandeQ the same from him through their legal notices dated c
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 D
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 E
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 . F
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 G
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 Nirma/a Anand's case (supra),
H
52 SUPREME COURT REPORTS (2013] 17 S.C.R
A Jawahar Lal Wadhwa Vs. Haripada Chakrobetty13 ; and A. Maria
Angelena's case (supra).
23. The learned senior counsel has rightly submitted that the
findings offact on issue.Nos.4 & 5 have been erroneously set aside
by the learned Judge of the High Court by recording his reasons
B 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
c 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
0 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
E 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
F
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.
G 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
H 13. (1989) 1 sec 76.
l.S. SIKANDAR (D) BY LRS. & ORS. v. K. SUBRAMANI & 53
ORS. [V. GOPALA GOWDA, J.]
recorded by us in answer to the point No.1 and we have held that A
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.
B
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 W.ith the terms of the agreement they shall C
pay sum of Rs.10,000/- to1he 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 D
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 E
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 F
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 G
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 H
54 SUPREME COURT REPORTS [2013] 17 S.C.R.
A 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
B 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
c 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.
o 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 0.S. No. 2012 of 1985, but, in the facts and
E circumstances of the case, no costs are awarded in these
proceedings.
Bibhuti Bhushan Bose Appeal allowed
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