SILVEY & ORS.versusARUN VARGHESE & ANR.

                         (2008] 3 S.C.R. 442


A                         SILVEY & ORS.
                                 v.
                   ARUN VARGHESE & ANR.
                  (Civil Appeal No. 830 of 2002)
                       FEBRUARY 26, 2007
B
       [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]
                                                                     ...
        Specific Relief Act, 1963 - Agreement to sell land - Suit
  for specific performance by purchasers - Dismissed by trial
c court, however, decree for specific performance granted by
  High Court - Correctness of - Held: High Court rightly held
  that vendors were not ready to perform their obligation in terms
  of the contract and took false plea in written statement -
  Purchasers have always been and are ready and willing to
  perform their part of contract from its inception - Hence, order
D
  of High Court upheld.
        The appellants-defendants entered into an agreement
  for sale of property with the respondents-plaintiffs. The
  plaintiff's paid the advance amount. The sale deed was to
E be executed by a given date. The defendants were to
  furnish the plaintiffs with all the documents. The plaintiffs
  filed suit for specific performance of agreement for sale
  since the defendants did not perform their part of contract.
  The trial court held that the plaintiffs were never ready
F and willing to perform their part of contract and did not
  take prompt steps for enforcing its obligations under the
  agreement and on that basis the defendants expended
  amounts for improvement of the property. The tri"I court
  dismissed the suit, however, granted the decree for
  recovery of advance amount paid to the defendants. In
G
  appeal, High Court decreed the suit in favour of the
  plaintiffs. Hence the present appeal.
         Dismissing the appeal, the Court

H                                442
                        SILVEY & ORS. v. ARUN VARGHESE & ANR.             443

         ~

                         HELD: 1.1 High Court found that platntiffs can be said A
                    to have been always ready and willing to perform their
                    part of the contract from the inception of the contract to
                    the date of the decree of the trial court. High Court rightly
                    noted that the plaintiffs pleaded in terms of section 16 C
                    of the Specific Relief Act, 1963 that they have always been B
                    and are ready and willing to perform their part of the
    "'   ..         contract. The case of the plaintiffs was that the defendants
                    were not ready with the document as contemplated in the
                    agreement for sale which resulted in the delay in the
                    performance of the contract and in the plaintiffs seeking c
                    the performance of the contract by the defendants.
                    [Paras 8 and 10] [447-H; 448-A, E, F, G]
                          1.2. The High Court noticed that the agreement in
                     respect of the adjacent land was entered into much before
                     the agreement in question. There was no impediment on D
~
          •          the plaintiffs obtaining a sale deed in respect of adjacent
                     land or that they apprehended it at any point of time that
                     they were not going to get an assignment to that extent.
                     The assignment in fact was obtained in respect of the
                     adjacent land. The High Court rightly highlighted that the E
                   . defendants had not performed their part of the contract
                     under agreement for sale as Urey had not obtained
                     requisite licence.for planting rubber plant, except in case
                     of defendant No. 3. None of the other defendants had
               ~
                     obtained the registration book for registration as a rubber F
                     estate with the Rubber Board as envisaged by Clause 7
                     of the Agreement for sale. [Para 11] [448-G, H; 449-A, BJ
                          1.3. Defendant no.3 acc~pted that possession
                    certificates could not be obtained by the defendants in
                    view of the nature of the property involved in the context G
                    of Kerala Land Reforms Act, and the Kerala Private Forest
                    (Vesting and Assignment) Act. The defendants never
              ..    responded to the letter issued by the plaintiffs seeking
                    performance of the contract. No response was also sent
                    to the other letters. A letter sent through registered post .H
    444      SUPREME COURT REPORTS                 [2008] 3 S.C.R.


A was refused. The lawyer's notice was also not responded
  to. [Para 12] [449-C, D]
        1.4 The defendants pleaded that defendant No. 3 had
  gone to the house of plaintiff No. 2 in place 'A' prior to
  receivinn any letter from the plaintiffs and had spoken that
8 they had told him that they were not keen in enforcing the
  obligation under the agreement for sale. But when                  ~
  examined the defendant No. 3 admitted that he had never
  met the plaintiff as pleaded in the written statement and
  that he or any other defendant had never gone to place
C 'A' to meet plaintiff No. 2 at his residence to speak about
  the performance of the contract. The plea stated in t~e
  written statement was abandoned in evidence. The High
  Court after analyzing the factual position, come to the
  conclusion that the defendants were really not ready
D to perform their obligation in terms of the contract and
  had taken a false plea in the written statement. [Para 13]
  (449-E-H; 4SO-A]
       Ardeshir H. Mama v. Flora Sassoon AIR 1928 PC 208;
E Lourdu Mari David and Ors. v. Louis Cl7innaya Arogiaswamy
  and Ors. 1996(S) SCC S89 - referred to.
         Raineri v. Miles and Anr. 1980 (2) All ER 14S 1SS -
    referred to.
F        CIVILAPPELLATE JURISDICTION: Civil Appeal No. 830
    of 2002.
         From the final Judgment dated 14.3.2001 of the High Court
    of Kerala at Ernakulam in A.S. No. 245/1991.
G         T.L. Vishwanatha Iyer and T.G. Narayanan Nair for the
    Appellants.
        P. Krishnammoorthy and Romy Chacko for the
    Respondents
          The Judgment of the Court was delivered by
H
                    SILVEY & ORS. v. ARUN VARGHESE & ANR.                    445
                             [DR. AR.IJIT PASAYAT, J.]

                     Dr. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to A
               the judgment of a Division Bench of the Kerala High Court
               allowing the appeal filed by the respondents who were the
               plaintiffs in a suit for specific performance of an agreement to
               sell immovable properties.                  ·
                     2. The plaintiffs in a suit for specific performance of an      B
...   ..       agreement to sell immovable properties are the respondents .
               The defendants, four in number entered into an agreement for
               sale of the respective portions held by them under Exhibit A1
               dated 23.2.1986. Thereunder, they agreed to convey to the
               plaintiffs an extent of 10 acres of property held by the four of      C
               them at a price of Rs. 19,750/- per acre. They received an
               advance of Rs. 50,000/-. The agreement provided that the sale
               deed was to be executed by 17.4.1986. The defendants were
               to furnish the plaintiffs with all documents in their possession
               and power and also furnish tax receipts for taxes paid up-to-         D
               date, the registration book for registration as a Rubber Estate
               with the rubber Board and the licence for planting rubber plants,
               get the properties measured by competent persons at the
               expense of the vendors-defendants in the presence of the
               plaintiffs-purchasers or their agents. According to the plaintiffs,   E
               the defendants were never ready with the requisite documents
               for executing the sale deed in favour of the plaintiffs and
               repeated demands by the plaintiffs for execution of the document
               did not meet with the proper response and, therefore, they had
           ,   ultimately to send a notice through a lawyer on 16.3.1988             F
               demanding performance and the defendants having failed to
               respond to that notice, the suit was being filed on 5. 7.1988 for
               specific performance of the agreement for sale. The plaintiffs
               pleaded that they were and they have always been ready and
               willing to perform their part of the contract. The defendants filed   G
               a written statement contending that the plaintiffs were in default.
               The plaintiffs never demanded performance of the agreement.
               The defendants, therefore, were under the impression that the
               plaintiffs have abandoned the agreement. The defendants have,
               therefore, effected improvements in the property and the value        H
    446       SUPREME COURT REPORTS                    [2008] 3 S.C.R.


A of the property has increased. It was, therefore, not a fit case
  where a decree for specific performance should be granted to
  the plaintiffs. It was pleaded that the plaintiffs were never ready
  and willing to perform their part of the contract.
        3. The trial Court held on the materials that time was not of
B essence of the contract and that the plaintiffs had the requisite
  capacity to raise funds for the purchase of the property covered
  by Exhibit Al. But, the trial Court held that plaintiffs had not taken
  prompt steps for enforcement of the obligations under Exhibit A
  1 agreement for sale. But, it did find that the defendants had not
C yet obtained the certificates of registration from the Rubber
  Board as envisaged by the agreement for sale and they had
  not even obtained possession certificates, since obviously there
  was considerable dispute about the properties covered in the
  survey number, of which the plaintiff schedule properties formed
D a part. The trial Court stating that in view of the delay in the
  plaintiffs approaching the Court, the plaintiffs have not shown          •
  themselves to be ready and willing to perform their part of the
  contract and in the matter of exercise of discretion, specific
  performance should be refused to the plaintiffs since the
E defendants have, on the basis that the plaintiffs were not any
  more interested purchasing the property, expended amounts
  for improvement of the property. Thus stating that the discretion
  has to be exercised against the plaintiffs, the trial court dismissed
  the suit for specific performance. But the trial court granted a
F decree for recovery of the advance of Rs.50,000/- paid by the
  plaintiffs to the defendants at the time of entering into Exh. A1
  agreement along with interest at the rate of 6% per annum
  thereon from the date of suit till date of realization. It is feeling
  aggrieved by the refusal to grant the plaintiffs a decree for
G specific performance that the plaintiffs have filed appeal before
  the High Court.
          4. In appeal, the High Court reversed the judgment and
    decree of the trial court and held that the suit was to be decreed
    in favour of the plaintiffs for specific performance as prayed for.
H
          SILVEY & ORS. v. ARLIN VARGHESE & ANR.                 447
                   [DR. ARIJIT PASAYAT, J.]
·•         5. Learned counsel for the appellants submitted that A
     though time may not be the essence of an agreement but
     circumstances can show that it was really so. Though extension
     was granted, that was not for very long period. Though originally
     it was stipulated in the agreement that the sale was to be
     completed before off set of monsoon, the last extension granted B
     was for a short period thereafter. There was no extension after
     17.4.1986. For long time no demand was made by the plaintiffs.
     The plaintiffs were really not interested for executing the sale
     deed as they were waiting to see whether the intended
     purchases of the neighbouring land would be completed. There c
     was no material to show that at all relevant points of time, the
     plaintiffs were ready and willing to perform their part of the
     agreement. Reference is made to the evidence of PW 1 to show
     that the purchase of the agreed land depended upon acquisition
     of the neighbouring land.
                                                                        D
.          6. It is submitted that there must be material to show about
     the readiness and willingness throughout, even though a person
     may have funds or is capable of raising funds. These aspects
     have been lost sight of by the High Court.
           7. Learned counsel for the respondents on the other hand E
     submitted that though in a given case even in respect of an
     agreement for sale of immovable property, time may be the
     essence of agreement yet it would depend upon several factors.
     If the circumstances show that the time was the essence of the
 >   agreement that fact can also be taken note of. In the instant F
     case, it is submitted that the defendants themselves have
     accepted that the time was extended and the agreement was
     to be given effect to before monsoon set in. But the period
     extended itself to a period which was admittedly after monsoon
     had set in. A false plea was taken by the defendants about the G
     plaintiffs having told them to have abandoned the agreement.
     This conduct itself disentitled the defendants from opposing the
•    suit for specific performance of contract.
          8. The High Court has found that plaintiffs can be said to
                                                                       H
    448       SUPREME COURT REPORTS                     [2008] 3 S.C.R.


A have been always ready and willing to perform their part of the
  contract from the inception of the contract to the date of the
  decree of the trial court, relying on the principles highlighted in
  Ardeshir H. Mama v. Flora Sassoon (AIR 1928 PC 208).
      9. In Raineri v. Miles and Anr. (1980 (2) All ER 145 at
B page 155) it was held as follows:

          "In the instant case the date for completion was not
          expressed to be of the essence, and it has not been
          suggested (though I think it might possibly have been) that
c         the surrounding circumstances nevertheless so rendered
          it. In that state of affairs the appellants submit that the law
          as it has stood ever since 1875 exculpated them from all
          liability for the foreseeable damage sustained by the
          respondents as a direct result of their failure to keep their
          word. My Lords, were this indeed right the respondents
D
          would suffer a substantial injustice. The fact that time had
          not been declared to be of the essence does not mean              •
          that the express date for completion could be supplanted
          by the court's treating it as a mere 'target' date and, in
          effect, enabling the defaulting party to insert into the
E         contractual provision some such words as' ..... or within a
          reasonable time thereafter.'"
        10. As rightly noted by the High Court, the plaintiffs have
  pleaded in terms of Section 16 C of the Specific Relief Act,
F 1963 (in short the 'Act') that they have always been and are
  ready and willing to perform their part of the contract. Plaintiff
  No. 2 as PW 1 has also spoken about this fact. The case of the
  plaintiffs was that the defendants were not ready with the
  document as contemplated in clause 2 of Exh. A1 which resulted
  in the delay in the performance of the contract and in the plaintiffs
G
  seeking the performance of the contract by the defendants.
       11 The High Court has noticed that the agreement in
  respect of the adjacent land was entered into much before the             •
  agreement in question. It has also been noticed by the High
H Court that there was no impediment on the plaintiffs obtaining a
         SILVEY & ORS. v. ARUN VARGHESE & ANR.                  449
                  [DR. ARIJIT PASAYAT, J.]

    sale deed in respect of adjacent land or that they apprehended A
    it at any point of time that they were not going to get an assignment
    to that extent. The assignment in fact was obtained in respect
    of the adjacent land. The High Court also highlighted, in our
    opinion rightly, that the defendants had not performed their
    part of the contract under Exh. A 1 as they had not obtained B
    requisite licence for planting rubber plant, except in case of
    defendant No. 3. None of the other defendants had obtained
    the registration book for registration as a rubber estate with the
    Rubber Board as envisaged by Clause 7 of the Agreement for
    sale.                                                              c
         12. DW1 accepted that possession certificates could not
    be obtained by the defendants in view of the nature of the
    property involved in the context of Kerala Land Reforms Act,
    and the Kerala Private Forest (Vesting and Assignment) Act.
    The defendants never responded to the letter - Exh, A2             D
    issued by the plaintiffs seeking performance of the contract.
•
    No response was also sent to the letters Exh. A2 to A 10.
    Exh. A6 was a letter sent through registered post which was
    refused. The lawyer's notice Exh. A 11 was also not responded
    to.                                                                E
          13. As regards the false plea of the defendants, the effect
    needs to be noted. It was pleaded that defendant No. 3 had
    gone to the house of plaintiff No. 2 in Alleppey prior to the
    receiving any letter from the plaintiffs and had spoken that they
    had told him that they were not keen in enforcing the obligation F
    under Exh. A 1. But when examined as DW1, the said defendant
    No. 3 admitted that he had never met the plaintiff as pleaded in
    the written statement and that he or any other defendant had
    never gone to Alleppey to meet plaintiff No. 2 at his residence
    to speak about the performance of the contract. The plea stated G
    in the written statement was abandoned in evidence. In Lourdu
    Mari David and Ors. v. Louis Chinnaya Arogiaswamy & Ors.
    (1996(5) sec 589), it was noted that the conduct of the
    defen~ant cannot be ignored while weighing the question of
    exercise of discretion for decreeing or denying a decree for H
   450        SUPREME COURT REPORTS                   [2008] 3 S.C.R.


A specific performance. The High Court has, after analyzing the
  factual position, come to the conclusion that the defendants were
  really not ready to perform their obligation in terms of the contract
  and had taken a false plea in the written statement.
       14. The appeal is without merit, deserves dismissal,
8 which we direct, but in the circumstance without any order as to
  costs.
    N.J.                                          Appeal dismissed.