JUDGMENT
Arun Kumar Mitra, J.
1. Facts : The plaintiffs were in need of money and took loan of Rs. 3,000/- by a security kobala dated 24-11-1964 and a registered Ekrarnama was also executed by the defendants on the same date stipulating the terms of reconveyance therein. Initially the plaintiffs filed a suit under Section 36 of Bengal Money Lenders Act, 1940 on 7th May, 1970. Subsequently, the plaintiffs filed an application for amendment on 1st March, 1975. The learned trial Judge dismissed the said application. The plaintiffs preferred appeal against the said rejection order and the appellate Court reversed the order.
2. By virtue of an amendment the plaintiffs converted the suit into a suit for specific performance of contract and the appellate Court below accepting the amendment remanded the matter to the trial Court for fresh trial in terms of the amended prayer of the plaintiffs.
3. The defendants contested the suit by filing written statement and additional written statement containing inter alia that the plaintiffs have not paid a sum of Rs. 3,000/- within the stipulated time, the right of reconveyance has been destroyed, so the suit must fail. During the pendency of the suit the defendant No. 1 and his heirs have been substituted by Order No. 89 dated 26-11-1980.
4. The learned trial Judge on the basis of the above pleadings framed the following issues :–
Issues :
(1) Is the suit maintainable under Section 36 of the Bengal Money Lenders Act ?
(2) Did the plaintiffs take a loan of Rs. 3,000/- from the defendants with a stipulation for interest of appropriation of the usufruct of the suit lands and did the registered agreement and document dated 24-11-1964 and ekrarnama of the same date constitute a loan transaction as alleged ?
(3) Are the plaintiffs entitled to the reliefs, as prayed for ?
(4) To what relief, if any are the plaintiffs entitled ?
(5) Is the suit for specific performance of contract barred by limitation ?
(6) Is the suit for specific performance of contract property valued and Court fees paid sufficient ?
(7) Are the plaintiffs entitled to get a decree for specific performance of contract for sale of the property ?
The issue No. 6 was not pressed at the time of hearing and the other issues were considered by the learned trial Judge and the learned trial Judge decreed the suit for specific performance with costs. The learned trial Judge got a decree for specific performance of contract against the defendants subject to deposit of a sum of Rs. 3,000/- in the Court by 30-9-1983 from the date. The learned trial Judge also passed the order that if the deposit is not made within the date mentioned, the suit will stand dismissed with costs. The learned trial Judge directed the defendants to execute and register a sale deed of the suit property at Rs. 3,000/- to the plaintiffs within 30 days from the date of such deposit as directed above failing which the plaintiffs will be at liberty to get the deed executed and registered through Court at the cost of the defendants. The defendants were given liberty by the learned trial Judge to withdraw the amount to be deposited by the plaintiffs on performing their part of contract and in case of their failure to execute and register the deed, the cost of registration etc. will be deducted from the amount to be deposited in the Court towards the consideration money.
5. Challenging the said judgment and decree passed by the learned Munsif of Bongaon in Title Suit No. 215 of 1970 the appellants/plaintiffs preferred Title Appeal No. 836 of 1983 before the learned 4th Additional District & Sessions Judge, 24 Parganas. Alipore, the learned appellate Court below formulated the following points for determination :–
(1) Is the plaintiffs suit in respect of prayer for specific performance of contract barred by limitation ?
(2) Have the plaintiffs been ready and willing to perform their part of contract ?
(3) Is the judgment of learned Munsif sustainable on facts and in law ?
(4) To what other reliefs, if any, are the appellants entitled ?
6. The learned appellate Court below dismissed the appeal on contest with costs and the judgment and decree of the learned Munsif was affirmed; The learned appellate Court below also directed the defendants to execute and register a deed of conveyance in respect of the suit lands in favour of the plaintiffs within two months from the date of the judgment failing which the plaintiffs were given liberty to have the reconveyance executed and registered through Court at the cost of the defendants. The learned appellate Court below further directed that the defendants on the date of reconveyance being executed and registered shall be at liberty to withdraw the consideration money of Rs. 3,000/- deposited in their names.
7. The said plaintiffs (defendants) being aggrieved by and dissatisfied with the judgment and decree of the appellate Court below affirming the judgment and decree of the learned trial Judge preferred the instant second appeal.
8. Now, before hearing the second appeal this Court should formulate the substantial questions of law on the basis of which the Court is to proceed with the appeal.
It appears from the records that when the appeal was heard under Order 41, Rule 11 of the Code of Civil Procedure, the Hon’ble Division Bench passed the following order:–
This appeal will be heard on all the grounds and issue a rule and stay as prayed for.”
However, this Court formulates the following questions as substantial question of law :–
Substantial Questions of Law :–
(1) Whether the learned Courts below erred in law in granting a decree for specific performance of contract notwithstanding the fact that the necessary averment as required by the provisions of the Specific Relief Act. were absent in the plaint.
(2) Whether from the materials on records both the learned Courts below ought to have held that the plaintiffs had failed to plead and prove that they were ready and willing to perform their part of contract.
(3) Whether the prayer for specific performance of contract in the instant case is barred by limitation.
(4) Whether the amendment as prayed for was rightly allowed and whether on the basis of the said amendment both the Courts below rightly decreed the suit.
Decisions relied upon
(i) (P.R. Deb & Associates v. Sunanda Roy)
(ii) (His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar)
(iii) (Kanshi Ram v. Om Prakash Jawal)
(iv) (Smt. Chand Rani v. Smt. Kamal Rani)
(v) (T.L. Muddukrishna v. Smt. Lalitha Ramchandra Rao).
9. Mr. S.P. Roychowdhury, the learned senior counsel appearing, for the appellants submitted that the learned trial Judge and the learned appellate Court below ought to have considered that initially the plaintiffs filed a suit for specific performance, the date of conveyance and the ekrarnama is 24-11-1964. The agreement provided that within 16-12-1969 the money is to be returned and reconveyance is to be made. The suit was filed on 7-5-1970. On the basis of the above context both the Courts below decreed the suit but both the Courts below did not consider that application for amendment was filed on 1-3-1975 and by virtue of the amendment ultimately the nature and character of the suit was changed. Initially, it was a suit under Section 36 of the Bengal Money Lenders Act and the same was converted into a suit for specific performance.
10. The learned Counsel Mr. Roychowdhury submitted that for the purpose of suit for specific performance three years is the limitation and both the Courts below did not at all consider that there was no averment or proof on behalf of the defendants that they were ready and willing to perform their part of contract. The learned Counsel referred to Section 16(c) and Section 20 of the Specific Relief Act and submitted that readiness and willingness to perform the part of the contract is the essence of specific performance and here these two basic conditions were not satisfied, neither there was pleading nor there was proof for readiness and willingness.
11. Mr. Roychowdhury also submitted that from 16-12-1969 to the date of filing the amendment application which brings about a new suit is more than three years and it was totally overlooked by the Courts below.
12. Mr. Roychowdhury then submitted that amendment should not have been allowed and when it has been allowed the time is to be calculated from the stipulated date, is the date of amendment (sic) application when virtual suit for specific performance came in.
13. Mr. Roychowdhury submitted that the Courts below neither did consider that after amendment the suit becomes a new suit and it comes under the coverage of Article 54 of the Limitation Act, 1963.
14. Mr. Roychowdhury submitted that the decree for specific performance is a discretionary one and both the Courts below wrongly exercised the discretion without considering the point of limitation and without considering the fulfilment of all conditions under Section 16(c) and Section 20 of the Specific Relief Act.
15. Mr. Roychowdhury submitted that the decisions referred to above clearly indicate and go in support of his contentions and both the judgments and decrees should be set aside and the appeal should be allowed accordingly.
16. Mr. Das, appearing for the respondents/plaintiffs submitted that the stipulated date in the Ekrarnama or the agreement was 16-12-1969 and three years brings to 1972 and the suit has been filed in 1970 and amendment relates back to the date of filing of the suit and in that view of the matter both the Courts below rightly decreed the suit and rightly directed the defendants to execute the reconveyance giving stipulated time.
17. The learned Counsel for the respondents Mr. Das further submitted that the plaintiffs in the amendment application pleaded that they are ready and willing to perform their part of contract and as such both the Courts below rightly decreed the suit and Mr. Das vehemently opposed the submission of Mr. Roychowdhury that the entire cause of action has been changed or the nature and character of the suit has been changed and as such the amendment brought in a new suit and the new suit which is the suit for specific performance should have been dismissed.
18. Mr. Das strongly supported the observations made by the Courts below.
19. Heard the learned Counsel for the parties. To facilitate the discussions the provisions of Section 36 of the Bengal Money Lenders Act are quoted hereinbelow :–
“Section 36. Reopening of transactions.– (1) Notwithstanding anything contained in any law for the time being in force for in any agreement if in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section whether heard ex parte or otherwise the Court has reason to believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appropriate, namely, shall–
(a) reopen any transaction and take an account between the parties;
(b) reopen any account already taken between the parties, purporting to close any previous dealings and to create new obligations;
(c) release the borrower of all liability in excess of the limits specified in Clauses (1) and (2) of Section 30;
(d) if anything has been paid or allowed in account on or after the first day of January, 1939 in respect of the liability referred to in Clause (c), order the lender to repay any sum which the Court considers to be repayable in respect of such payment or allowance in account as aforesaid :
Provided that in the case of a loan to which the provisions of Sub-section (2) of Section 29 apply the lender or money-lender and each of his assignees shall be liable to repay the sum which the Court considers to be repayable in respect of and in proportion to the sum received by such lender or money-lender and such assignee;
(e) set aside either wholly or in part or revise or alter any security given or agreement made in respect of any loan, and if the lender has parted with the security, order him to indemnify the borrower in such manner and to such extent as it may deem just:
Provided that in the exercise of these powers the Court shall not–
(i) reopen any adjustment or agreement, purporting to close previous dealings and to create new obligations, which has been entered into at a date more than twelve years prior to the date of the suit by the parties or any person through whom they claim, or
(ii) do anything which affects any decree Of a court, other than a decree in a suit to which this Act applies which was not fully satisfied by the first day of January, 1939 or anything which affects an award made under the Bengal Agricultural Debtors Act (1936) Ben. Act VII of 1936.
Explanation : A decree shall not, for the purposes of this section, be deemed to have been fully satisfied so long as there remains undisposed of an application by the decree-holder for possession of property purchased by him in execution of the decree.
(2) If in exercise of the powers conferred by Sub-section (1) the Court reopens a decree, the Court–
(a) shall, after affording parties an opportunity of being heard, pass a new decree in accordance with the provisions of this Act, and may award to the decree-holder such costs in respect of the reopened decree as it thinks fit:
Provided that where, in consequence of the execution of the decree which is reopened, the property of the judgment-debtor has been purchased bona fide by any person other than the decree-holder jointly with the decree-holder, the decree-holder’s claim and the judgment-debtor’s liability in respect of the decree which is reopened shall be reduced by the amount of the purchase money paid by such other person and received by the decree-holder,
(b) shall not do anything which affects any right acquired bona fide by any person, other than the decree-holder, in consequence of the execution of the reopened decree,
(c) shall order the restoration [of possession] to the judgment-debtor of which property, if any, of the judgment-debtor acquired by the decree-holder in consequence of the execution of the reopened decree as may be in the possession of the decree-holder on the date on which the decree was reopened,
(d) shall order the judgment-debtor to pay to the decree-holder, in such number of instalments as it may think fit, the whole amount of the new decree passed under Clause (a) (and upon such payment of all the instalments the sale shall be deemed to have been set aside), and
(e) shall direct that, in default of the payment of any instalment ordered under Clause (d), the decree-holder shall be put into possession of the property referred to in Clause (c) and that the amount for which the decree-holder purchased such property in execution of the reopened decree shall be set off against so much of the amount of the new decree as remains unsatisfied.
(3) In this section the expression “suit to which this Act applies” includes a proceeding in respect of any application relating to the admission or amount of a proof of a loan advanced before or after the commencement of this Act in any insolvency proceedings.
(4) This section shall apply to any suit, whatever its form may be, if such suit is substantially one for the recovery of a loan or for the enforcement of any agreement or security in respect of a loan or for the redemption of any such security.
(5) Nothing in this section shall affect the rights of any assignee or holder for value if the Court is satisfied that the assignment to him was bona fide, [and, in the case of an assignment after the commencement of this Act, also that he had not received] the notice referred to in Clause (a) of Sub-section (1) of Section 28.
(6) Notwithstanding anything contained in any law for the time being in force,–
(a) the Court which, in a suit to which this Act applies, passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by Sub-sections (1) and (2)–
(i) in any proceedings in execution of such decree, or
(ii) on an application for review of such decree made within one year of the date of commencement of this Act, and the provisions of Rules 2 and 5 of Order XLVII of the First Schedule to the Code of Civil Procedure, 1908, (5 of 1908) shall not apply to any such application;
(b) any Court before which an appeal is pending in respect of a decree referred to in Clause (a) may either itself exercise the like powers as may be exercised under Sub-sections (1) and (2), or refer the case to the Court which passed the decree directing such Court to exercise such powers, and such Court shall after exercise thereof return the record with the additional evidence, if any, taken by it and as its findings and the reasons thereof to the Appellate Court and thereupon the provisions of Rule 26 of Order XLI of the First Schedule to the Code of Civil Procedure, 1908, (5 of 1908) shall apply.
20. Then the provisions of Section 16(c) and Section 20 of the Specific Relief Act are also quoted hereinbelow :–
“Section 16. Personal bars to relief.– Specific performance of a contract cannot be enforced in favour of a person–
(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.
Explanation.– For the purpose of Clause (c),–
(i) Where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in Court any money except when so directed by the Court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.”
Section 20 Discretion as to decreeing specific performance.– (1) The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal.
(2) The following are cases in which the Court may properly exercise discretion not to decree specific performance–
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee whereas its non-performance would involve no such hardship on the plaintiff;
(c) where the defendant entered into the contract, under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.– Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b).
Explanation 2.– The question whether the performance of a contract would involve hardship on the defendant within the meaning of Clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The Court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.”
21. The Hon’ble Apex Court in the decision (supra) referring to Chand Rani’s Case or relying upon the said case observed 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. Although in the case of a sale of immovable property time is not of the essence of the contract, it has to be ascertained whether under the terms of the contract, when the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. The Court should meticulously consider all facts and circumstances before granting specific performance.
22. In the Hon’ble Apex Court has made the following observations in Paragraph 2 and 3 which are quoted hereinbelow :–
“2. There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For determining his willingness to perform his part of the contract, the conduct has to be properly scrutinised. There is no documentary proof that the plaintiff had ever funds to pay the balance of consideration. Assuming that he had the funds, he has to prove his willingness to perform his part of the contract. According to the terms of the agreement, the plaintiff was to supply the draft sale deed to the defendant within 7 days of the execution of the agreement, i.e. by 27-2-1975. The draft sale deed was not returned after being duly approved by the petitioner. The factum of readiness and willingness to perform plaintiff’s part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The Court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The facts of this case would amply demonstrate that the petitioner/plaintiff was not ready nor had the capacity to perform his part of the contract as he had no financial capacity to pay the consideration in cash as Contracted and intended to bite for the time which disentitles him as time is of the essence of the contract.”
“3. It is sought to be contended by Mr. B.K. Mehta, the learned Senior Counsel for the petitioner, that the petitioner has performed the essential terms of the contract. Essential terms of the contract is that he has to return the approved draft sale deed which he has already returned to him. But amendment sought in the sale deed is not of material particulars and is not an essential terms and, therefore, the High Court was in error in considering this aspect of the matter. We find no force in the contention. The essential term of the contract is executing the sale deed within the stipulated period. He did not perform his part of the contract within the stipulated time. The High Court was right in refusing to enforce the contract. It being discretionary remedy, the High Court has exercised sound judicial discretion to negate the relief of specific performance of the contract.”
23. In the decision (supra) in Paragraphs 5 and 6 the observations of the Hon’ble Apex Court are quoted hereinbelow:–
“5. Having regard to the facts of this case and the arguments addressed by the learned Counsel, the question that arises for consideration is: whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles. When the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant.”
“6. The appeal is accordingly allowed. The appellant shall not again sell the property for five years. The plaintiff-respondent will be paid a sum of Rs. 10 lakhs within a period of three months from today. In case the plaintiff-respondent avoids receipt of the amount within the stipulated time, it would be open to the appellant to deposit the same to the credit of the plaintiff in the trial Court. In case of default, the decree would stand confirmed. No costs.”
24. Now comes the celebrated judgment of the Hon’ble Apex Court in Chand Rani’s case, (supra) wherein Paragraph 24 the observations are made in the manner as follows :–
“24. From an analysis of the above case-law it is clear that in the case of sale of immovable property there is no presumption to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are :–
1. from the express terms of the contract;
2. from the nature of the property; and
3. from the surrounding circumstances, for example: the object of making the contract.”
25. In the judgment (supra) where the limitation point has been squarely covered. In this judgment in Paragraph 8 the following is the observation :–
“8. Under these circumstances, it must be held that for the purpose of limitation, what is material is that the limitation begins to run from the date the parties have stipulated for performance of the contract. The suit is required to be filed within three years from the date fixed by the parties under the contract. Since the application for amendment of the plaintiff came to be filed after the expiry of three years, certainly it changed the cause of action as required to be specified in the plaint. The suit for mandatory injunction is filed and the specific performance was sought for by way of an amendment. The cause of action is required to be stated initially in the plaint but it was not pleaded. It was sought to be amended, along with an application for specific performance which, as stated earlier, was rejected. Under these circumstances, even by the date of filing of the application, namely, November 5, 1992, the suit was barred by limitation. The High Court, therefore, was right in refusing to permit the amendment of the plaint.
26. It is obvious that immediately a suit, which was initially filed under Section 36 of Bengal Money Lenders Act has been amended and converted into a suit for specific performance. The question of amendment being going back to the date of filing of the original suit, covering the limitation does not arise. Basically two suits are different in nature, their causes of actions are different and naturally, limitation will run differently. For the purpose of specific performance it will come under the coverage of Article 54 of the Limitation Act. In this case the question of specific performance comes into play or the learned Courts below took into consideration the point of specific performance only in 1975 whereas admittedly the limitation runs from 1969. Automatically, the suit becomes time barred and that apart it comes under the coverage of the Hon’ble Apex Court decision .
27. In my view, both the Courts below totally neglected and failed to consider the point of readiness and willingness which must be continuous and both the Courts below also failed to consider that this readiness and willingness have not been averred and/or not been proved. The learned appellate Court below without scanning the judgment and decree passed by the learned trial Judge wrongly dittoed the judgment and decree passed by the learned trial Judge and failed to perform its statutory obligations and/or duties.
28. In view of the discussions made above and in view of the decisions of the Hon’ble Apex Court referred to above, both the judgments and decrees passed by the learned trial Judge as well as the learned appellate Court are set aside.
29. The suit is therefore, dismissed.
30. Let a decree be drawn up accordingly.
31. In the substantiality of the facts and circumstances the parties are to bear their respective costs.
Let the lower Court records be sent down to the Courts below forthwith.
Urgent xerox certified copy, if applied for, will be given to the parties as expeditiously as possible.