JUDGMENT
AR. Lakshmanan, J.
1. The appellant/plaintiff filed O.S. No. 2595 of 1981 on the file of the Fourth Additional Judge, City Civil Court, Madras, to direct the respondents/ defendants to specifically perform the agreement to sell dated 18.7.1974 and execute and register the sale deed in favour of the appellant conveying the B schedule property free from all encumbrances and for possession of the ground floor of the B Schedule property.
2. The appellant’s case in brief is as follows:
The respondents are the absolute owners of the property bearing Door No. 68, G.N. Chetty Road, T. Nagar, Madras-17, more fully described in the A Schedule to the plaint. The A Schedule property has an out-house, which is described in the B Schedule, with a total ground area of one ground and 800 sq.ft. which is an independent property. The entire A schedule including the B Schedule property was subject to three registered mortgages, one in favour of Hindu Janopakara Saswatha Nidhi, dated 23.12.1967 the second in favour of Permanent General Benefit Fund Limited dated 5.9.1968 ad the third one in favour of one V. Kamala, dated 4.4.1974. According to the appellant, the respondents approached her for the sale of the out-house described in the B Schedule with direct access to the property from G.N. Chetty Road, free from encumbrances. The appellant agreed for the purchase of the said property. Thereupon, both the appellant and the respondents entered into an agreement dated 18.7.1974 for the purchase of B Schedule property for a sale consideration of Rs. 62,500. As and by the terms of the agreement, the appellant on various dates paid a total sum of Rs. 26,200 as part of the sale price and advance. The appellant was put in possession of the first floor of the premises in part performance of the agreement to sell dated 18.7.1974, on 2.9.1974.
3. According to the appellant, the essential terms of the agreement dated 18.7.1974 were performed by her, other than the terms, the performance of which she has been prevented. It is her case that the time was not the essence of the contract and the same was not the intention of the parties. The last payment was on 10.12.1977 of a sum of Rs. 700 for a fence. The sale was delayed due to the laches of the respondents. A tenant by name Marina Cabs, who was occupying the ground floor of the B Schedule property was evicted due to the efforts of the appellant as one interested in getting vacant possession of the ground floor. The appellant was always ready and willing to purchase the B Schedule property as per the terms of the agreement. The appellant was continuously persuading the respondents to complete the sale. A draft sale deed was prepared by Mr. K.A. Basheer Ahmed, Advocate, under the instructions of the appellant and the respondents on 26.7.1977, which was approved on 5.10.1,977, by which the terms of the agreement was varied and the sum of Rs. 30,000 payable to the mortgagee V. Kamala was agreed to be paid at the time of registration of the sale deed before the Sub Registrar. The respondents deliberately failed to execute the sale deed and trying to wriggle out of the agreement having received substantial amounts.
4. The appellant would submit that the respondents sent a lawyer’s notice on 6.10.1978 making false allegations and clearly indicating their intention of going back on the agreement alleging a breach of contract on the part of the appellant, for which a suitable reply was sent by the appellant on 25.10.1978. The respondents have no right to resile from the agreement. The appellant has performed the essential and substantial terms of the agreement and she is continuously ready and willing to perform the rest of the obligations and pay the balance of sale consideration and have the property registered in her name. The respondents are also negotiating for the sale of the B Schedule property to third parties and if they are allowed to do so, the appellant would be put to great hardship. The suit was, therefore, filed for specific performance of the agreement to sell dated 18.7.1974 and for possession of the remaining portion of the B schedule property in the ground floor.
5. Both the respondents filed a written statement on 24.8.1979. They admit the sale consideration of Rs. 62,500 and the receipt of Rs. 26,200 from the appellant. The appellant was also put in possession of the first floor in the said house as early as 2.9.1974. The respondents suffered loss at Rs. 400 per month for the said portion. The appellant has not performed the condition which is essential to the appellant becoming entitled to specific performance. The appellant has not paid Rs. 30,000 as mentioned in Condition No. 1 (c) of the agreement to V. Kamala. The sale itself was for discharging the mortgage and due to non-payment of the amount within seven months from the agreement dated 4.4.1974, the interest for five years has accumulated, and the appellant alone has to pay the said interest in case specific performance is to be granted. Under condition No. 9 of the agreement, the appellant becomes entitled to refund the amounts, paid and damages of Rs. 10,000 on condition of the appellant having paid all the amounts as per condition No. 1 mentioned above. Since the appellant has not performed all the obligations under condition No. 1, she is not entitled to specific performance or damages.
6. In the written statement the respondents also urged that they sent a reply dated 5.9.1975 to the notice of the appellant charging the appellant having committed breach of contract by not making payment as stipulated in Clause 1 of the agreement, and claimed Rs. 10,000 as liquidated damages agreed under Clause 10. According to the respondents, they have not approved the draft sale deed on 5.10.1977 and they did not agree to varying the conditions of payment of Rs. 30,000 to V. Kamala by making it payable at the time of registration of the sale deed. The respondents have always been insisting on payment of the money as per the terms of the agreement since the purpose of the sale was only to discharge the mortgage and save interest. The agreement of sale with the appellant is not subsisting and the appellant having committed breach is answerable to all the damages suffered by the respondents. The claim of the appellant is barred as the suit filed beyond three years of breach. The relief of specific performance cannot be granted to the appellant as it is the appellant who has not paid the money as required under the agreement.
7. Both the respondents have filed an additional written statement with a counter claim on 14.4.1980. According to them, by reason of breach of condition of the agreement, the respondents have suffered damages by way of interest from 18.2.1975 at 18% per annum amounting to Rs. 22,500 and that the appellant is liable to pay the said sum to the respondents by way of damages. According to the respondents, the appellants is liable to pay damages for use and occupation at the rate of Rs. 500 per month from the date of breach. However, the respondents restrict their claim for a period of three years to Rs. 18,000. Thus, in all, the appellant is liable to pay Rs. 40,500 under both the claims. The value of the properties, lands and building has increased very much subsequently and the property is worth Rs. 1.5 lakhs to Rs. 2 lakhs. The appellant is taking undue advantage of the rise in price in asking for specific performance of the agreement. The respondents further state that at the time when the sale agreement was entered into, the Finance Act permitted capital gains to be deposited in nationalised bank, which gave higher rate of interest and which also enabled the sellers to obtain loan on the said deposits. The said facility has been withdrawn and subsequently the sellers have to deposit the capital gains amount in Rural Bonds for seven years at the interest rate of 7% per annum without the facility of borrowing loan on the said deposits. This causes hardship to the respondents. This was not fore-seen at the time of agreement. The rate of capital gains tax is also increased.
8. The appellant filed a reply statement denying the allegations contained in the written statements. It is stated that subsequent to the filing of the suit, the appellant had deposited a further sum of Rs. 30,000 which is now in deposit in a nationalised bank earning interest. The appellant was put in possession of the first floor of the B Schedule property in part performance of the agreement to sell. The respondents have now occupied the ground floor of the B Schedule property having sold the main house, and are now causing serious troubles to the appellant and her family and thereby coerce her to give up her right and also evict the premises. The appellant has reiterated that she has been always ready and willing to discharge her obligation, under the agreement to sell. The breach was committed only by the respondents. The consideration of Rs. 62,500 agreed under the agreement of sale is adequate considering the market price at that time. The contentions raised in the additional written statement stating that the respondents are affected by the present Finance Act etc., cannot be comprehended. The legal incident of a transaction of sale for whatever consideration cannot cause any hardship to any person.
9. The respondents filed another additional written statement on 16.4.1974 stating that the agreement dated 18.7.1974 is not enforceable since it is a conditional or contingent agreement and also subject to the condition of permission by the Urban Ceiling Authorities for sale of the property. According to the 2nd respondent, he is not a party to the draft sale deed and he has not approved the said draft. Therefore, the appellant cannot enforce the alleged modified agreement against the half share of the 2nd respondent in the suit property and no specific performance can be granted to the appellant in respect of the 2nd respondent’s half share.
10. On the side of the appellant, her husband was examined as P.W. 1 and on the side of the respondents, they have examined themselves as D.Ws. 1 and 2 and one M.K. Srinivasan as D.W. 3. On the side of the appellant, Exs. A-1 to A-17 were marked and on the side of the respondents Exs. B-1 to B-l 1 were marked.
11. The learned Fourth Additional City Civil Court Judge framed the necessary issues and additional issues. The lower court rejected the relief of specific performance of the agreement to sell since the appellant has committed breach of the contract. The suit was dismissed by holding that the non-payment of Rs. 30,000 within the period fixed in the agreement of sale disentitles the appellant to ask for the relief of specific performance. The court below also rejected, the case of the appellant and held that the draft sale deed Ex. A-8 was not wholeheartedly approved by the 1st respondent and the 2nd respondent did not approve the draft. The lower court, however, granted, a decree for Rs. 10,000 on the counter claim. Aggrieved against the judgment and decree of the court below, the unsuccessful plaintiff has filed the above appeal in this Court.
12. We have heard Mr. S. Sampathkumar for the appellant and Mr. R. Mohan for the respondents.
13. The appellant has admittedly entered into an agreement with the respondents for the purchase of the out house with the first floor and ground floor forming part of house and premises No. 68, G.N. Chetty Road, T. Nagar, Madras-17. for a sum of Rs .62,500 as per the agreement to sell dated 18.7.1974 marked as Ex. A-2 As per clause 1 therein the price of Rs. 62,500 is payable as hereunder:
(a) Rs. 10,000 to be paid as advance.
(b) Rs. 11,000 payable to Purasawalkam Hindu Janopakara Saswatha Nidhi on or before 10.8.1974 in discharge of the mortgage debt dated 23.12.1967.
(c) Rs. 30,100 payable to V. Kamala in discharge of mortgage dated 4.4.1974 within seven months from the date of Ex. A-2 viz., on or before 18.2.1975.
(d) Rs. 5,000 payable to the respondents on their releasing the property from mortgage in favour of Permanent General Benefit Fund.
(e) Balance Rs. 6,500 to be paid before the Registrar at the time of registration of the sale deed.
14. It is not disputed that the appellant has paid a sum of Rs. 26,200 towards the sale price. Rs. 11,000 payable on or before 10.8.1974 as per Clause l(b) of the agreement was paid on 2.9.1974 as the respondents were not in town. The respondents have handed over a portion of the suit property to the appellant in part performance of the agreement to sell on 2.9.1974. The respondents have also received various payments towards price. The last payment of Rs. 700 was made on 10.2.1977 for the fence to be provided by the respondents as per Clause 7 of Ex. A-2 agreement. On 26.7.1977, the respondents advocate Mr. K.A. Basheer Ahmed drafted the sale deed in consultation with the respondents, in which the terms of payment were altered and varied to the effect that Rs. 35,000 should be paid to V. Kamala. the mortgagee, before the Sub Registrar at the time of registration of the sale deed. This document is marked as Ex. A-8. We have perused Ex. A-8 and it is seen that the same was prepared by K. A. Basheer Ahmed, Advocate. It is dated 26.7.1977. The same has been typed in three white sheets and corrections have been carried out in several places in ink. The draft sale deed was approved on 5.10.1977 by the 1st respondent H. Madhava Rao. He has also made an endorsement ‘approved’ at the bottom of page 6 and signed the same on 5.10.1977. The 1st respondent has also admitted his signature in Ex. A-8.
15. After Ex. A-8, by Ex. A-12 dated 9.12.1977, the respondents wrote to the appellant that she could provide fence with concrete posts at a total cost of Rs. 700 and the expenditure can be deducted from the sale consideration. This letter was sent by both the respondents. In the subject it is mentioned as “Expenses for providing fencing with concrete posts as per sale agreement dated 18.7.1974. “Both the respondents have signed Ex. A-12 at Madras on 9.12.1977 assuring their consent and co-operation to the appellant. The appellant, in fact, did so. Ex. A-7 dated 10.12.1977 is the receipt signed by both the respondents expressing thanks to the appellant for receipt of a sum of Rs. 700 as per the agreement dated 18.7.1974. It is also mentioned in the receipt that the amount was being received for the expenses for providing six lines of barbed wire with concrete posts at No. 68, G.N. Chetty Road as per the plan.
16. Next we shall consider Ex. A-10, which is a notice on behalf of the appellant by her counsel P.S. Surna & Co., Madras-1 dated 25.10.1978 to B. Kalathinathan, advocate for the respondents. Ex. A-10 is the reply to the notice sent by Mr. P. Kalathinathan on behalf of the respondents dated 6.10.1978. In paragraph 5 of Ex. A-10 there is a reference to Ex. A-8 draft sale deed. It is useful to extract paragraph 5 of Ex. A-10, which runs as follows:
As early as on 26.7.1977 our client sent to your client a draft sale deed for the approval by your clients. The said draft sale deed was retained by your clients for about three months and was sent back to our client after the signature of the first of your clients only. The second of your clients does not sign the draft sale deed. This shows the ulterior intentions of your clients. Your clients have also failed to get the property released from the second mortgagee which your clients were bound to do
17. Ex. A-11 dated 30.11.1978 is the reply to Ex. A-10 sent by Mr. B. Kalathinathan to the counsel for the appellant M/s. P.S. Surna & Co., As seen above, in Ex. A-10, the appellant insisted on the respondents executing the sale deed. It is also stated therein that the respondents have failed and neglected to register the sale deed in favour of the appellant in spite of repeated demands and reminders from their client and repeated promises made by the respondents. On a careful reading of Ex. A-11, which is the reply to Ex. A-10, it is clear that Ex. A-11, is absolutely silent about paragraph 5 of Ex. A-10 extracted above. The 1st respondent though in his evidence as D.W. 1 has stated in chief-examination that Mr. Basheer Ahmed was not his advocate, in the cross-examination at a later stage he accepted it. He has also accepted his signature in Ex. A-8 and the same was signed on the morning of 5.10.1977 and his son the 2nd respondent was not present when he signed the same and that Ex. A-8 was given to the 1st respondent on the morning of 5.10.1977 by the appellant and her husband and he promised them to obtain the signature of his son the 2nd respondent and himself deliver the document. He has further deposed that his son has refused to sign Ex. A-8 after seeing its contents and the changes made in regard to the payment. Therefore, he refused to execute the sale deed. He has also further deposed that the corrections in Ex. A-8 have been made by Mr. Basheer Ahmed, their advocate, and that so far as he is concerned, he has accepted the changes made in Ex. A-8.
18. Mr. R. Mohan, learned Counsel for the respondents contended that Ex. A-8 was not agreed to by the 2nd respondent and that the novation after the breach of Ex. A-12 is not enforceable. He has also further contended that the appellant has not discharged her onus, which is cast upon her, and that she has also failed to establish a case of readiness and willingness and failed to prove that he has discharged her obligations under the agreement. She has also failed to perform her obligations under the sale agreement. Mr.R. Mohan invited our attention to paragraph 19 of the written statement that the claim is barred as the suit is filed beyond three years of breach and that the relief of specific performance cannot, therefore, be granted to the appellant as it is the appellant who has not paid the money as required under the agreement. He would further contend that since Ex.A-8 is three years after Ex.A-2, it cannot be treated as a contract substituting Ex.A-2. He drew our attention to Section 62 of the Indian Contract Act.
19. Section 62 of the Indian Contract Act reads as follows:
If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.
The word ‘novation’ has been defined in Scarf v. Jardine (1882)7 A.C. 345 and (1881)5 All E.R. reprint, 651 by the House of Lords as follows:
that there being a contract in existence, some new contract is substituted for it either between the same parties (for that might be) or between different parties, the consideration mutually being the discharge of the old contract. Novation of a contract comprises two elements, the discharge of one debt or debtor and the substitution of a new debt or debtor. The discharge is governed by the proper law of the contract. A substituted contract should rescind or extinguish the previous contract.
Thus, in the instant case, we have to see whether a novation under Section 62 of the Indian Contract Act is brought about by alteration between the same parties on introduction of new terms.
20. We have seen earlier that the 1st respondent, the father of the 2nd respondent has been acting throughout for the 2nd respondent also. The evidence of D.Ws. 1 and 2 confirms this. D.W. 2 also says in his evidence that he saw Ex. A-8 draft sale deed dated 5.10.1977 and that the same was brought by D.W. 1. However, he did not approve the same since clauses have been changed. Therefore, due to laches he did not agree for the changes made. However, he has admitted his signature in Ex. A-7 dated 10.12.1977, which is long after Ex. A-8 dated 26.7.1977. As already seen, both the respondents have received a sum of Rs. 700 from the appellant as per the sale agreement dated 18.7.1974 and that the said amount was being received towards the expenses for providing six lines of barbed wires with concrete posts as per the plan. If, according to the 2nd respondent, he was not agreeable for the changes made in Ex. A-8, nothing prevented him from refusing to receive the amount tendered under Ex. A-7. In fact, under Ex. A-12 dated 9.12.1977, both the respondents wrote to the appellant that she could provide fence with concrete posts at a total cost of Rs. 700 and that the expenditure can be deducted from the sale consideration. He has also admitted that Mr. K.A. Basheer Ahmed, Advocate, had appeared in some rent control original petitions on behalf of the respondents. Admittedly, the 1st respondent has approved Ex. A-8 and singed the same. P.W. 1 in his evidence said that Mr. K.A. Basheer Ahmed, Advocate, has prepared Ex. A-8, that corrections have been made in Ex. A-8 by Mr. K.A. Bahseer Ahmed and that to prepare Ex. A-8, P.W. 1 was accompanied by the father of V. Kamala and the 1st respondent and all of them went to Mr. K.A. Basheer Ahmed. It is settled law that an advocate is more than the agent of the client and that he holds the position of trust- vide Rengadurai v. Gopalan .
21. However, the evidence of the 2nd respondent as D.W. 2 is that he knew about Ex. A-8 on the night of 5.10.1977 itself. As already seen, he has signed Exs. A-12 and A-7 and there is no written protest by him about Ex. A-8. All the receipts Exs. A-3 to A-5 have been signed by both the respondents. Ex. A-9 is yet another document to be noticed by us. The said notice was sent on 6.10.1978 by the counsel for the respondents to the appellant.. Here again, there is no reference to Ex. A-8.
22. For the fore-going discussions, we are of the view that a new contract is substituted between the parties and that the substituted contract under Ex. A-8 extinguished the. previous contract under Ex. A-2. The parties have agreed for alteration of the terms by introduction of new terms.
23. Let us now deal with the contention put forward by Mr. R. Mohan, learned Counsel for the respondents, that the novation after the breach of Ex. A-2 is not enforceable. Novation, in our view, strictly means substitution. We have already discussed in paragraphs supra and found that Ex. A-8 is an alteration to some terms in Ex. A-2. Section 62 of the Indian Contract Act deals with novation as well as alteration. If the parties to a contract agree to a substitute for the new contract or to rescind or alter it, the original contract need not be performed. Learned Counsel for the respondents cited the following decisions reported in Chand Rani v. Kamal Rani , K.Appukuttan Panicker v. S.K.R.A.K.R. Athapapa Chettiar , PL.CT. SP. Subramania Chettiar v. Muthiah Chettiar , Bishambhar Nath Agarwal v. Kishan Chand .V. Rathinasabapathi Pillai v. T.R. Sriramulu Chettiar 99 L.W. 239 G.Rosaiah v. C. Balarami Reddy , P.Ramswami v. Chandra Kotayya A.I.R. 1925 Mad. 261, Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319, M/s. Sriram Cotton Pressing Factory (P) Limited v. K.E. Narayanaswami Naidu , Viswanathan v. R. Lakshmi Animal (1993)2 M.L.J. 560, K.M.P.R.N.M. Firm v. The perumal Chetty 42 M.L.J. 236 : I.L.R. 45 Mad. 180 : A.I.R. 1922 Mad. 314 and K.S. Sundaramayyar v. K. Jagadeesan.
24. The above decisions cited by the learned Counsel for the respondents, in our opinion, are not at all relevant to the present appeal since there is no abandonment of contract in Ex. A-2 as contended by Mr. R. Mohan, learned Counsel for the respondents. As already seen, there is no absolute substitution by Ex. A-8 in the place of Ex. A-2. We have carefully perused Exs. A-2, A-8 and in our opinion, nothing vital is changed in the substituted document Ex. A-8, and more especially, there is no change in the property or the price offered. Even in Ex. A-8, the recital refers to Ex. A-2 and the mode of payment to V. Kamala alone is changed. In our opinion, the parties are certainly entitled to alter the terms at any time. The only thing is, there cannot be unilateral alteration or variation on material aspects. Only in cases where doubts arise as to whether the parties can fall back upon the earlier contract or rely only on the new contract in connection with important clauses like, arbitration, the judgments cited by the learned Counsel for the respondents are relevant. Whether novation can take place after there being a breach of the prior contract or without there being such breach are the factors in those judgments. We need not reiterate here that the judgments cited by the learned Counsel for the respondents are distinguishable on facts and circumstances of each case.
25. Mr. R. Mohan cited the decision reported in K.M.P.R.N.M. Firm v. Thepemmal Chetty 42 M.L.J. 236 : I.L.R. 45 Mad. 180 : A.I.R. 1922 Mad. 314 and submitted that there is difference of opinion between the Calcutta High Court and the Madras High Court on the question of novation in Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319 and a contrary view taken by the Madras High Court in I.L.R. 45 Mad. 180. We prefer to follow our own High Court judgment reported in I.L.R. 45 Mad. 180.
26. In K.M.P.R.N.M. Firm v. Theperumal Chetty 42 M.L.J. 236 : I.L.R. 45 Mad. 180 : A.I.R. 1922 Mad. 314, a Division Bench held that there is nothing in Section 62 of the Contract Act to imply that the substitution, rescission or alteration of a contract, after its breach, must be supported by consideration. The Bench also said that the English Law doctrine is not applicable to India. Sir William Ayling, Offg. Chief Justice, observed as follows:
The learned Judges in Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319 undoubtedly lay down the proposition that the provisions of Section 62 do not apply after there has been a breach of the original contract. But with all respect I fail to see any justification for this restriction of the operation of the section on the mere fact that it would otherwise contravene a somewhat technical rule of English Law.
The learned Officiating Chief Justice further said that he agrees in this connection with the remarks of Kumaraswami Sastri, J., in Ramiah Bhagavatar v. Somasi Ambalam 29 M.L.J. 125. It is useful in this context to extract the observations of Kumaraswami Sastri, J., in 29 M.L.J. 125, which was agreed to by the learned Officiating Chief Justice in K.M.P.R.NM. Firm v. Theperumal Chetty 42 M.L.J. 236 : I.L.R. 45 Mad. 180 : A.I.R. 1922 Mad. 314, which runs as follows:
There is nothing either in Section 62 of the Contract Act or in Section 26(e) of the Specific Relief Act to restrict the operation of those sections to variations of a contract prior to its breach. Where there has been a variation of a contract subsequent to its breach, there can be no decree for specific performance of the contract except with the variation. Manohar Koyal v. Thakur Das Nasar I.L.R. 15 Cal. 319, dissented from.
Odgers, J., who is the companion Judge of Sir William Ayling, Officiating Chief Justice, in K.M.P.R.NM. Firm v. Theperumal Chetty 42 M.L.J. 236 : I.L.R. 45 Mad. 180 : A.I.R. 1922 Mad. 314, has also held as follows:
With great deference to the learned Judges who decided in 1888 Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319, above referred to. I cannot think that there was any such intention. Further we have the Madras case Raiah Bhagavatar v. Somasi Ambalam 29 M.L.J. 125. Of the learned Judges, Seshagiri Ayyar and Kumaraswami Sastri, JJ. who decided that case, the former was not as at present advised prepared to dissent from Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319, but based his judgment on another ground. The latter distinctly disapproved of the doctrine in Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319. He said:
I do not think that Courts should engraft on the plain meaning of the provisions of Indian enactments, limitations founded on technical rules of English Law and pleadings especially in cases where such limitations are not suited to the conditions prevailing in this country.
With these observations, I respectfully agree and following that learned Judge, I am prepared if necessary to dissent from Manohar Koyal v. Thakur Das Naskar I.L.R. 15 Cal. 319, for the reasons I have set out above.
27. As seen earlier, the parties have condoned any breach by either party and agreed to the altered terms in Ex. A-8 for fulfilment of the subject matter of Ex. A-2. The respondents have never fulfilled their part with regard to Clauses 1(d) and 7 of the agreement and these were done after Ex. A-8. Admittedly, the appellant has remitted in full the agreed price under Ex. A-2. We have gone through the judgment of the court below and we are unable to give our seal of approval for the approach the Court below has taken in regard to Ex. A-8. The reasons given by the learned trial Judge in rejecting Ex. A-8 are untenable. Section 63 of the Indian Contract Act is quite clear about the variation of terms by mutual agreement. As rightly pointed out by Mr. S. Sampathkumar, learned Counsel for the appellant, the learned trial Judge has totally erred in holding that the appellant is not entitled to specific performance of the agreement to sell and that the appellant has committed breach of the contract.
28. We have already seen that the non-payment of Rs. 30,000 before the period fixed in the agreement to sell has been properly explained by the appellant. Therefore, in our view, the appellant would not be disentitled to the relief of specific performance. This apart, Clauses 1(a)to 1(d)of the agreement show that the property is subject to three mortgages and the mortgage in favour of one V. Kamala is the third one and therefore, not entitled to any priority over the other two mortgages. The trial court has clearly erred in finding issues No. 2 against the appellant. It failed to see that the respondents having not obtained release, cannot claim payment of Rs. 30,000 and that in any event, subsequent receipt of amount from the appellant under Exs: A-6 and A-7 dated 12.7.1977 and 10.12.1977 amounts to waiver. There is no laches, as contended by Mr. R. Mohan in performing her part of the contract by the appellant. The court below has miserably failed to see that the proposed payment of Rs. 30,000 at the time of registration will not amount to variation of the terms of the agreement since the parties to the contract have agreed for variation in terms by consent. In fact, the 1st respondent has approved the draft sale deed under Ex. A-8. The 2nd respondent has got knowledge about Ex. A-8 but refused to approve the said draft with some mala fide intention and ulterior motive. However, receipt of payment under Exs. A-6 and A-7 would, in our opinion, amount to waiver of his right by the 2nd respondent. Therefore, he cannot now try to wriggle out of his obligations under the contract Ex. A-2, which was substituted by Ex. A-8.
29. We are also in agreement with the argument of Mr. S. Sampathkumar that the purpose and the price mentioned in the original agreement were not changed at all. The finding of the learned trial Judge that the draft sale deed Ex. A-8 was not whole heartedly approved by the 1st respondent and the 2nd respondent did not approve the draft is also ununderstandable. The 1st respondent in his evidence as D.W. 1 has stated that he has gone through the draft and has approved and signed the same. However, he has explained the reason for refusal, by the 2nd respondent, who did not approve the draft for some extraneous reasons. In our opinion, the respondents have not performed their part. They did not obtain the release and did not obtain permission from the competent authority for sale. This statutory requirement was necessary till 14.5.1978 when the Central Act was repealed. The finding otherwise rendered by the court below that the respondents were not bound to obtain sanction because there was no such term in Ex. A-2 is wholly unacceptable. The court below has failed to see that the Act haying been enacted in 1976, no such term would be found in Ex. A-2 and that the respondents themselves have admitted the necessity for such sanction. The respondents having received substantial portion of the price money are now trying to wriggle out of the contract. Such a thing should not be allowed to prevail. Rise in price of the properties in the City of Madras and in other places cannot be a ground for rejecting the claim for specific performance. Likewise, the respondents also have not proved any damage because the prices have risen. The court below has erred in granting a decree for Rs. 10,000 on the counter claim without proof of damage. Therefore, we have no hesitation in setting aside the judgment of the court below.
30. In the result, the appeal is allowed, the judgment and decree of the trial court are set aside, and the suit is decreed as prayed for with costs throughout. We direct the respondents to execute the sale deed in favour of the appellant within two months from today failing which the trial court shall execute the same within one month thereafter.