IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.01.2011 CORAM: THE HONOURABLE MS.JUSTICE R.MALA A.S.No.270 of 2007 and M.P.No.1 of 2007 A.N.Arunachalam .. Appellant Vs. 1. T.Sivaprakasam 2. T.Vijayakumar .. Respondents Appeal suit against the judgment and decree dated 19.12.2006 in O.S.No.16 of 2003, on the file of the Additional District Court/Fast Track Court No.IV, Bhavani, Erode District. For appellant : Mr.N.Manokaran For respondents: Mr.K.Ravichandra Baabu JUDGMENT
The First Appeal has been filed against the judgment and decree dated 19.12.2006 in O.S.No.16 of 2003, on the file of the Additional District Court/Fast Track Court No.IV, Bhavani, Erode District.
2. The averments in the plaint are as follows:
(a) The plaintiff is the tenant under the defendants in the suit properties for the past six years. The rent paid finally per month is Rs.1,100/-. The defendants are the owners of the suit properties. The defendants, due to their monetary crisis, entered into a sale agreement on 1.9.1997 with one R.Rangasamy Mudaliar, and the sale price was fixed at Rs.2 lakhs, and the defendants received Rs.1,50,000/- as advance from the said R.Rangasamy Mudaliar.
(b) The said Rangasamy Mudaliar died, due to which, his son Madheswaran could not execute the sale agreement. The said Madheswaran demanded the advance amount of Rs.1,50,000/- from the defendants, and hence, the defendants approached the plaintiff-tenant for purchase of the properties. Therefore, the plaintiff and the defendants entered into sale agreement on 16.7.2001 and the sale price fixed was Rs.4,25,000/- and advance of Rs.1,50,000/- was paid and this amount of Rs.1,50,000/- was paid back to the said Madheswaran whose father earlier executed the sale agreement with the defendants.
(c) The sale agreement between the plaintiff and the defendants, was duly executed and the previous sale agreement-holder Madheswaran was one of the attestors. The time stipulated for execution of sale deed was six months. Time is not the essence of the contract. The plaintiff was always ready and willing to perform his part of the contract by paying the balance amount and get the sale deed executed.
(d) The defendants represented that they were in dire need of money and hence they demanded Rs.1,00,000/- from the plaintiff, which could be adjusted towards the remaining part of sale consideration. Therefore, the plaintiff advanced Rs.1,00,000/- on 20.12.2001, for which, the first defendant issued a cheque without date bearing Cheque No.86697 drawn on Bhavani Koodal Urban Bank Ltd., Bhavani, in favour of the plaintiff, which was promised to be adjusted towards the remaining part of sale consideration. Thus, it could be noticed that the totally, the plaintiff paid Rs,2,50,000/- (Rs.1,50,000 + 1,00,000) to the defendants. Therefore, the balance sale consideration is Rs.1,75,000/-. The plaintiff was ready to perform his part of contract with the balance sale consideration.
(e) Suddenly, the plaintiff received a legal notice dated 30.1.2002 stating that one P.Shanmugasundaram, son of Palaniappa Mudaliar, obtained a money decree in O.S.No.28 of 1998, on the file of the Sub-Court, Bhavani, on which, the decree amount has to be discharged for sale. The defendants did not disclose the encumbrance of the suit properties, to the plaintiff. The defendants suppressed the encumbrance of the debt and the defendants were advised by the plaintiff to clear the encumbrance and execute the sale deed.
(f) As the defendants did not care to clear the encumbrance, the plaintiff issued legal notice to the defendants to clear the encumbrance incurred in O.S.No.28 of 1998 and execute the sale deed as per the earlier agreement of sale, dated 16.7.2001. The defendants issued reply notice dated 22.3.2002 with false allegation that the amount of Rs.1,50,000/- received from the plaintiff earlier, was only a tenancy-advance amount, by denying the receipt of Rs.1,00,000/- on 20.12.2001. Hence, the plaintiff was constrained to file the present suit for specific performance of contract, to direct the defendants to execute the sale deed by receiving the balance sale consideration, and free from any sort of encumbrance and for costs.
3. The sum and substance of the written statement filed by the defendants, are as follows:
(a) The suit is not maintainable. The plaintiff has been occupying the suit premises as a tenant under the defendants from July 1996 to 15.7.2001 and the rent is Rs.1,500/- p.m. The plaintiff paid rent till 15.7.2001. The defendants deny that they have entered into sale agreement with one Rangasamy Mudaliar, S/o Sengoda Mudaliar for the consideration of Rs.2 lakhs on 1.9.1997 and received the advance of Rs.1,50,000/-.
(b) The plaintiff was not ready and willing to perform his part of the contract. The sale agreement, dated 16.7.2001 is not executed with an intention to sell the properties to the plaintiff at any point of time and the defendants did not receive any consideration for the alleged sale agreement, dated 16.7.2001. The defendants have received Rs.1,50,000/- from the plaintiff only for the purpose of “Bokkiam” (nghf;fpak;) {usufructuary mortgage}, and the plaintiff has been residing as a tenant in the suit properties.
(c) The allegation of the plaintiff in the plaint that the defendants represented to the plaintiff that, one of their brothers filed the suit in the name of one S.K.Sundaramoorthy on two promissory notes for Rs.2 lakhs, on the file of the Sub-Court, Bhavani, and that the amount has been discharged, is false. The allegation of the plaintiff that in order to clear the encumbrance of the above said promissory notes of Sundaramoorthy, the defendants were in dire need of money and requested the plaintiff to advance Rs.1 lakhs, and the amount may be adjusted towards the remaining part of the sale consideration, is denied. The allegation that the defendants totally received Rs.2,50,000/- as part of the sale consideration, is not true.
(d) In respect of money decree in O.S.No.28 of 1998 on the file of the Sub-Court, Bhavani, the defendants preferred appeal, and hence, there is no need on the part of the defendants to disclose the above said decree in O.S.No.28 of 1998 to the plaintiff, which could not be treated as an encumbrance. The defendants prayed for dismissal of the suit.
4. The trial Court, after considering the arguments advanced by both sides and on a perusal of the pleadings both in the plaint and in the written statement, framed three issues for consideration. Considering the oral evidence of P.Ws.1 to 3 and D.W.1 and Exs.A-1 to A-11 and Exs.B-1 to B-7, dismissed the suit, stating that the plaintiff was not ready and willing to perform his part of the contract. Challenging the judgment and decree of the trial Court, the plaintiff has come forward with this First Appeal.
5. This Court, after hearing the arguments of the learned counsel appearing for the parties, frames the following points for consideration:
(i) Whether the trial Court’s finding that Ex.A-1 is the sale agreement and not executed as the security for the amount received, i.e. Rs,1,50,000/- as “Bokkiam” (nghf;fpak;) (usufructuary mortgage), is correct ?
(ii) Whether the trial Court is correct in holding that the appellant/plaintiff was not ready and willing to perform his part of the contract ?
(iii) Whether the judgment and decree of the trial Court are sustainable ? and
(iv) To what relief the plaintiff is entitled to ?
6. Learned counsel appearing for the appellant/plaintiff submitted that as the trial Court considered Ex.A-1 as a sale agreement and not as usufructuary mortgage, it ought to have decreed the suit, instead, the trial Court gave a finding that the appellant/plaintiff was not ready and willing to perform his part of the contract, on the basis of the oral evidence adduced by P.Ws.1 to 3 and D.W.1. Learned counsel further submitted that the trial Court committed error in dismissing the suit, without properly considering the oral and documentary evidence. He further submitted that Ex.A-2 undated cheque for Rs.1 lakh, has been issued by one of the respondents/defendants, which shows that the plaintiff received Rs.1 lakh and totally, the defendants have paid Rs.2,50,000/-. The trial Court failed to consider the fact that the respondents/defendants have not taken any action to clear the cheque received by the plaintiff. The trial Court committed error in holding that non-issuance of notice within the time stipulated in the sale agreement, is fatal to the case of the plaintiff.
7. Learned counsel appearing for the appellant/plaintiff further submitted that the appellant/plaintiff has properly pleaded and proved that he was always ready and willing to perform his part of contract. The trial Court ought not to have taken some sentences from the deposition of P.W.1 and dismissed the suit, stating that the appellant/plaintiff was not ready and willing to perform his part of the contract.
8. It is contended firstly by the learned counsel appearing for the appellant/plaintiff is that non-issuance of pre-suit notice within the stipulated time, is not fatal. Nextly, it is contended that mere consideration of few sentences from the deposition of P.W.1, will not create any presumption that the appellant/plaintiff was not ready and willing to perform his part of the contract. Lastly, he submitted that the respondents/defendants raised a plea that Ex.A-1 has been executed only as a security for the money received, i.e. “Bokkiam” (nghf;fpak;) usufructuary mortgage, and rent shall not be paid by the appellant/plaintiff for his occupation till the amount of Rs.1,50,000/- is repaid. Since the trial Court accepted that Ex.A-1 is the registered sale agreement, the trial Court ought to have decreed the suit as prayed for in the plaint and the conduct of the respondents/defendants also has to be looked into while granting the relief of discretionary decree.
9. Learned counsel appearing for the respondents/defendants submitted that even though the trial Court held that Ex.A-1 is a sale agreement, it has not properly considered the oral and documentary evidence and so, the finding of the trial Court on this aspect, is not correct. He further submitted that the trial Court is correct in holding that the appellant/plaintiff was not always ready and willing to perform his part of the contract. To substantiate the same, he relied on various decisions of the Supreme Court.
10. Now, this Court has to decide as to whether non-issuance of notice within the stipulated time mentioned in the sale agreement, is fatal to the case of the appellant/plaintiff.
11. Ex.A-1 is the registered sale agreement, dated 16.7.2001. Admittedly, the suit properties belong to the respondents/defendants. The appellant/plaintiff was a tenant under them before Ex.A-1 sale agreement has been entered upon between the parties. The respondents/defendants raised a defence that though the document has been named and styled as a sale agreement, there was no intention of the parties to execute the sale deed and the intention is only “Bookiam” (nghf;fpak;) usufructuary mortgage. The appellant/plaintiff was permitted to reside there without paying any interest. After considering the oral and documentary evidence, the trial Court came to the conclusion that Ex.A-1 is a sale agreement.
12. In this regard, it is appropriate to quote Section 92 of the Indian Evidence Act:
Section 92 : Exclusion of evidence of oral agreement.
When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms;
Proviso (1)–Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law.
Proviso (2)–The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this proviso applies, the Court shall have regard to the degree of formality of the document.
Proviso (3)–The existence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved.
Proviso (4)–The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents.
Proviso (5)–Any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved:
Provided that the annexing of such incident would not be repugnant to, or inconsistent with, the express terms of the contract.
Proviso (6)–Any fact may be proved which shows in what manner the language of a document is related to existing facts.”
Therefore, as per Section 92 of the Indian Evidence Act, no one is permitted to let in evidence contra to a registered document. Hence, the parties have to prove that the document in question, is in accordance with law. The burden is upon the respondents/defendants to prove that the document has been executed as “Bokkiam” (nghf;fpak;) (usufructuary mortgage).
13. At this stage, it is appropriate to consider the Division Bench decision of this Court, relied on by learned counsel appearing for the appellant/plaintiff reported in 2003 (1) MLJ 694 (Ramalingam Vs. Subramanyam), wherein, it was held that in a suit for specific performance of an agreement of sale, when the defendants plead that it is only a loan transaction a duty is cast upon him to prove that the said agreement is not a sale agreement of sale.
14. It is also appropriate to notice a decision of this Court reported in 2010 (8) MLJ 1050 (P.Thulasimani Vs. K.G.Chandran), wherein this Court observed that the onus of proving that the sale agreement was executed only with regard to some money transaction and that there was no intention of selling the suit property, is upon the defendant who made the contention, once the execution of sale agreement, is admitted.
15. While considering the above decision of this Court reported in 2010 (8) MLJ 1050 (cited supra), as well as the oral and documentary evidence, I am of the view that Ex.A-1 is a sale agreement. The learned trial Judge has considered this aspect with proper circumspection and came to the conclusion that Ex.A-1 is a sale agreement. Hence, the finding of the trial Court that Ex.A-1 is a sale agreement, is sustainable.
16. Considering the oral and documentary evidence on both sides, along with Section 92 of the Indian Evidence Act, the respondents/defendants have not proved that Ex.A-1 was executed after receipt of Rs.1,50,000/- and executed only for the purpose of “Bokkiam” (nghf;fpak;) (usufructuary mortgage), for which, the appellant/plaintiff was permitted to reside as a tenant in the suit properties by the respondents/defendants from 16.7.2001. So, the trial Court has considered all the aspects in proper perspective.
17. It is pertinent to note that as per Ex.A-1 sale agreement, the sale consideration was fixed at Rs.4,25,000/- and on the date of Ex.A-1 sale agreement, Rs.1,50,000/- is stated to have been paid. The case of the appellant/plaintiff is that subsequently the respondents/defendants demanded some amount to discharge the loan and so, the appellant/plaintiff gave Rs.1 lakh and hence, Ex.A-2 undated cheque has been given for receipt of Rs.1 lakh in favour of the appellant/plaintiff with an undertaking that the amount of Rs.1 lakh has to be given credit to the balance sale consideration.
18. It is also to be noted that Ex.A-2 undated cheque was signed by the first defendant, but he has not entered into the box to adduce evidence. D.W.1/D2 fairly conceded that the signature in the cheque is of his brother. Considering the evidence of P.W.1 and D.W.1 and Ex.A-1 sale agreement and Ex.A-2 undated cheque, it is clearly proved that Ex.A-1 is styled as an agreement and so, the trial Court is correct in holding that Ex.A-1 is a sale agreement.
19. As already stated, as per Section 92 of the Indian Evidence Act, duty is cast upon the defendants to show that Ex.A-1 is not a sale agreement and it was only executed as “Bokkiam” (nghf;fpak;) usufructuary mortgage, and the burden is upon the defendants to prove the same. Except the ipse dixit of D.W.1, no other evidence has been adduced before the trial Court to prove the case of the defendants. In such circumstance, I am of the view that Ex.A-1 is only a sale agreement. Point No.(i) is answered accordingly.
20. Point No.(ii):
Learned counsel for the appellant/plaintiff submitted that since Ex.A-1 sale agreement is a true and genuine document, the plaintiff averred in the plaint that he was always ready and willing to perform his part of the contract and also let in evidence; but the trial Court picked up some sentences from the evidence of P.W.1/plaintiff and came to the conclusion that the appellant-plaintiff was not ready and willing to perform his part of the contract. Learned counsel for the appellant-plaintiff further submitted that the above finding of the trial Court is erroneous. To substantiate his arguments, learned counsel relied on various decisions.
21. Before considering the decisions relied on by the learned counsel for the appellant/plaintiff, it is appropriate to incorporate Section 16 of the Specific Relief Act, as follows:
Section 16: Personal bars to relief:
Specific performance of a contract cannot be enforced in favour of a person–
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(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.”
22. As per Section 16(c) of the Specific Relief Act, the appellant/plaintiff who is the agreement holder, should always be ready and willing to perform his part of the contract.
23. In support of his submissions, learned counsel appearing for the appellant/plaintiff relied upon the following decisions of the Supreme Court:
(i) 2005 (7) SCC 534 (Aniglase Yohannan Vs. Ramlatha):
“9. ….. While examining the requirement of Section 16(c) this Court in Syed Dastagir Vs. T.R. Gopalakrishna Settty, [1999] 6 SCC 337 noted as follows: (SCC p.341 para 9)
” 9. So the whole gamut of the issue raised is, how to construe a plea specially with reference to Section 16(c) and what are the obligations which the plaintiff has to comply with in reference to his plea and whether the plea of the plaintiff could not be construed to conform to the requirement of the aforesaid section, or does this section require specific words to be pleaded that he has performed or has always been ready and is willing to perform his part of the contract. In construing a plea in any pleading, courts must keep in mind that a plea is not an expression of art and science but an expression through words to place fact and law of one’s case for a relief. Such an expression may be pointed, precise, sometimes vague but still it could be gathered what he wants to convey through only by reading the whole pleading, depending on the person drafting a plea. In India most of the pleas are drafted by counsel hence the aforesaid difference of pleas which inevitably differ from one to the other. Thus, to gather true spirit behind a plea it should be read as a whole. This does not distract one from performing his obligations as required under a statute. But to test whether he has performed his obligations, one has to see the pith and substance of a plea. Where a statute requires any fact to be pleaded then that has to be pleaded may be in any form. The same plea may be stated by different persons through different words; then how could it be constricted to be only in any particular nomenclature or word. Unless a statute specifically requires a plea to be in any particular form, it can be in any form. No specific phraseology or language is required to take such a plea. The language in Section 16(c) does not require any specific phraseology but only that the plaintiff must aver that he has performed or has always been and is willing to perform his part of the contract. So the compliance of ‘readiness and willingness’ has to be in spirit and substance and not in letter and form. So to insist for a mechanical production of the exact words of a statute is to insist for the form rather than the essence. So the absence of form cannot dissolve an essence if already pleaded.”
10. Again in Motilal Jain Vs. Ramdasi Devi, [2000] 6 SCC 420 it was noted as follows:
“7. The other contention which found favour with the High Court, is that plaint averments do not show that the plaintiff was ready and willing to perform his part of the contract and at any rate there is no evidence on record to prove it. Mr.Choudhary developed that contention placing reliance on the decision in Varghese case (Ouseph Varghese Vs. Joseph Aley–[1969] 2 SCC 539). In that case, the plaintiff pleaded an oral contract for sale of the suit property. The defendant denied the alleged oral agreement and pleaded a different agreement in regard to which the plaintiff neither amended his plaint nor filed subsequent pleading and it was in that context that this Court pointed out that the pleading in specific performance should conform to Forms 47 and 48 of the First Schedule of the Code of Civil Procedure. That view was followed in Abdul Khader case (Abdul Khader Rowther Vs. P.K.Sara Bai [1989] 4 SCC 313 : AIR 1990 SC 682).
8. However, a different note was struck by this Court in Chandiok case (R.C.Chandiok Vs. Chuni Lal Sabharwal–[1970] 3 SCC 140 : AIR 1971 SC 1238). In that case ‘A’ agreed to purchase from ‘R’ a leasehold plot. ‘R’ was not having lease of the land in his favour from the Government nor was he in possession of the same. ‘R’, however, received earnest money pursuant to the agreement for sale which provided that the balance of consideration would be paid within a month at the time of the execution of the registered sale deed. Under the agreement ‘R’ was under obligation to obtain permission and sanction from the Government before the transfer of leasehold plot. ‘R’ did not take any steps to apply for the sanction from the Government. ‘A’ filed the suit for specific performance of the contract for sale. One of the contentions of ‘R’ was that ‘A’ was not ready and willing to perform his part of the contract. This Court observed that readiness and willingness could not be treated as a straitjacket formula and that had to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned. It was held that in the absence of any material to show that ‘A’ at any stage was not ready and willing to perform his part of the contract or that he did not have the necessary funds for payment when the sale deed would be executed after the sanction was obtained, ‘A’ was entitled to a decree for specific performance of contract.
9. That decision was relied upon by a three-Judge Bench of this Court in Syed Dastagir case–(Syed Dastagir Vs. T.R.Gopalakrishna Setty– [1999] 6 SCC 337) wherein it was held that in construing a plea in any pleading, courts must keep in mind that a plea is not an expression of art and science but an expression through words to place fact and law of one’s case for a relief. It is pointed out that in India most of the pleas are drafted by counsel and hence they inevitably differ from one to the other; thus, to gather the true spirit behind a plea it should be read as a whole and to test whether the plaintiff has performed his obligations, one has to see the pith and substance of the plea. It was observed : (SCC Headnote):
“Unless a statute specifically requires a plea to be in any particular form, it can be in any form. No specific phraseology or language is required to take such a plea. The language in Section 16(c) of the Specific Relief Act, 1963 does not require any specific phraseology but only that the plaintiff must aver that he has performed or has always been and is willing to perform his part of the contract. So the compliance of ‘readiness and willingness’ has to be in spirit and substance and not in letter and form.”
It is thus clear that an averment of readiness and willingness in the plaint is not a mathematical formula which should only be in specific words. If the averments in the plaint as a whole do clearly indicate the readiness and willingness of the plaintiff to fulfil his part of the obligations under the contract which is the subject-matter of the suit, the fact that they are differently worded will not militate against the readiness and willingness of the plaintiff in a suit for specific performance of contract for sale.”
(ii) 2007 (10) SCC 231 (P.S.Ranakrishna Reddy Vs. M.K.Bhagyalakshmi):
Specific Relief Act, 1963 Section 20 Exercise of discretionary jurisdiction of Court under Agreement of sale of immovable property Conduct of seller considered Unwillingness to perform his part of the agreement in view of rise in price of the property Held on facts, exercise of discretion in favour of seller not called for.
Specific Relief Act, 1963 Sections 20, 10 and 14 Relief Grant/denial of Rise in the price of an immovable property by itself is not a ground for refusal to enforce a lawful agreement of sale.
Deeds and documents Interpretation of A document must be read in its entirety All parts of the deed should be read Intention of the parties must be gathered from the document itself.”
(iii) 2000 (6) SCC 420 = AIR 2000 SC 2408 (Motilal Jain Vs. Ramdasi Devi) :
“The aspects of delay which are relevant in a case of specific performance of contract for sale of immovable property are:
(i) delay running beyond the period prescribed under the Limitation Act;
(ii) delay in cases where though the suit is within the period of limitation, yet:
(a) due to delay the third parties have acquired rights in the subject-matter of the suit;
(b) in the facts and circumstances of the case, delay may give rise to plea of waiver or otherwise it will be inequitable to grant a discretionary relief.
Here none of the above-mentioned aspects applies. The last notice was issued on 26.11.1978 and from that date the suit was filed only after nine months and not after more than a year as noted by the High Court. Therefore on the facts of this case the ground of delay cannot be invoked to deny relief to the plaintiff.”
“Merely because the plaintiff claims damages in a suit for specific performance of contract as an alternative relief, it cannot be said that he is not entitled to the main relief of specific performance of the contract itself.”
(iv) 2008 (4) SCC 212 (Ramakrishna Pillai Vs. Muhammed Kunju):
“10. There can be no quarrel with the position in law urged by learned counsel for the respondent about the parameters to be considered while dealing with a suit for specific performance. But the High Court’s judgment is clearly vulnerable. Firstly, there was no dispute ever raised by the defendants about the readiness and willingness of the plaintiffs to fulfil their obligations. The High Court was clearly in error in holding that no plea regarding readiness and willingness was raised. As noted above, the trial court in its judgment has referred to various portions of the averments in the plaint where the plaintiffs had categorically stated that they were and are always willing to fulfil their part of the obligations. The High Court also failed to notice that there was no plea either the written statement or in the cross-objections filed in the appeal before the High Court that the plaintiffs were not ready and willing to fulfil their part of the obligation.
11. The conclusions of the High Court are to the following effect:
“Then the question is whether the respective plaintiffs have pleaded and proved that they were always ready and willing to perform their part of the contracts. Even though time did not start to run on the expiry of two months from the dates of the agreements, certainly, the plaintiffs were aware that the defendants had to discharge their obligation and get a release of the mortgage in two months of the dates of the agreements. Until the sending of the notices preceding the suits, there is nothing to show that the plaintiffs at any time called upon the defendants to perform their part of the contract.”
12. The conclusions are clearly contrary to the pleadings of the plaintiffs. It was categorically stated in the plaint in both the suits that the plaintiffs are always ready and willing to fulfil their part of the obligations and that defendants were evading the execution for one reason or the other.”
24. In this regard, it is appropriate to notice a decision reported in 2002 (2) MLJ 112 (Jayakumar Vs. Robert), wherein, this Court observed as follows:
“40. From Commentaries on Specific Relief Act and the plethora of authorities of the Privy Council, the Supreme Court and this Court, I will make an attempt to piece together the salient points for enforcement of a contract for specific performance.
41. Whether it is an agreement for purchase or repurchase:
(1) Both parties to the contract should have performed their respective parts of the contract, all conditions precedent, the express and essential terms, the implied and essential terms, all representations made at the time of the contract on the faith of which it was entered into.
(2) Both the parties must show their readiness and willingness to do all matters and things on their part to be done by them after the contract.
(3) The purchaser should be ready with either the funds or should be possessed of the capacity to generate funds within the time stipulated. He should also have the necessary willingness of mind to complete the sale from the inception.
(4) The vendor should be equally ready and willing to perform his part of the obligations from day one, e.g., clearing the encumbrance if any on the property, procuring the encumbrance certificate, income-tax clearance, steps to get the tenant, if any, in the occupation of the property out, getting consent from other sharers, etc.
(5) The position of both the parties should be examined not that of the purchaser alone.
(6) Time may not be essence of the contract. But, if time is to be construed as the essence of the contract, the parties should intend so.
(7) If intended in writing, it should be unequivocal and unmistakable. It will not avail if some monetary penalty is imposed in case of default or if the contract provides for extension of time in certain contingencies. It should be specified that the contract will stand cancelled if the contracting parties do not call upon each other to complete the transaction within the time stipulated, by expressing his/her readiness and willingness to honour the terms of the contract and conclude the sale.
(8) Equally if not intended in writing, it should be capable of being inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances. Once it is so inferred, as for the cases intended in writing, further exercise should follow-either party to the contract should call upon the other party to complete the transaction making it known that he/she is ready and willing to perform his/her part of the arrangement.
(9) If time is not of essence originally, it can be made of essence even subsequently by serving notice on the party.
(10) Even if there is default in carrying out the contract within the specified time, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances it is not inequitable, the relief can be granted.
(11) Even though time may not be the essence of the contract for sale of immovable property and suit can be filed within the period of three years, provided under Article 54 of the Limitation Act, it should be performed within a reasonable time having regard to the terms of the contract prescribing a time-limit and nature of the property and the same cannot be ignored altogether on the ground that time has not been made the essence of the contract relating to immovable properties.
(12) The purchaser need not jingle coins or produce the money unless called upon to do so by the Court.”
(emphasis supplied)
25. Learned counsel appearing for the appellant/plaintiff further submitted that the conduct of the respondents/defendants has to be taken into account while granting the discretionary relief. To substantiate this submission, he relied upon the decision of the Supreme Court reported in 2008 (11) SCC 45 (Silvey Vs. Arun Verghese):
“14. … In Lourdu Mari David Vs. Louis Chinnaya Arogiaswamy (1996 (5) SCC 589) it was noted that the conduct of the defendant cannot be ignored while weighing the question of exercise of discretion for decreeing or denying a decree for specific performance. ..”
26. In the present case, the respondents-defendants have taken a plea that Ex.A-1 sale agreement has been executed only for the purpose of the loan amount received as “Bokiam” (nghf;fpak;) (usufructuary mortgage) and there is no intention for executing the sale agreement, but however, the trial Court and this Court in the earlier paragraph of this judgment, came to the conclusion that Ex.A-1 is a sale agreement. In such circumstances, the conduct of the respondents/defendants must be taken into account while granting the relief of specific performance. As held by the Supreme Court in the decision(s) cited above, the language in Section 16(c) of the Specific Relief Act, does not require any specific phraseology, but only the plaintiff must aver that he has performed or has always been and is willing to perform his part of the contract. The Apex Court further held that the readiness and willingness could not be treated as a straight-jacket formula and that had to be determined from the entirety of facts and circumstances relevant to the intention and the conduct of the party.
27. So, it is appropriate to consider the pleadings as well as the evidence let in by the appellant/plaintiff to decide as to whether the appellant-plaintiff was ready and willing to perform his part of the contract. In the plaint in paragraph 7, the plaintiff fairly pleaded that he was ready and willing to perform his part of the contract by paying the balance amount and to get the execution of the sale deed and he also issued notice.
28. At this juncture, it is appropriate to consider the documents marked on the side of the plaintiff. Ex.A-1 sale agreement is dated 16.7.2001. Six months’ time was agreed upon for execution of the sale agreement. Ex.A-3 notice dated 30.1.2002, issued by one Shanmugasundarm to both the plaintiff and the defendants, in which, it is stated that in order to defeat and defraud the decree amount obtained in O.S.No.28 of 1998 on the file of Sub-Court, Bhavani, the plaintiff and defendants entered into the sale agreement. The plaintiff’s Advocate issued notice under Ex.A-4 on 5.3.2002 and requested the defendants to execute the sale agreement and asked them to clear the encumbrance in the properties by discharging the decree in O.S.No.28 of 1998 on the file of the Sub-Court, Bhavani and that has been received by the defendants and reply has been issued by the defendants in Ex.A-5 dated 22.3.2002, in which they have put forth their case that they had no intention to sell the properties, but however they fairly conceded that they received Rs.1,50,000/- on 16.7.2001 under the tenancy agreement between them and the plaintiff in respect of the properties. The defendants further stated in that notice that there was no consideration in respect of the alleged sale agreement, which was executed as security in respect of the house for the advance amount of Rs.1,50,000/- on 16.7.2001 and to that effect, there was no rent fixed for residing in the suit properties. Similarly, there was no interest for the advance of Rs.1,50,000/- received on 16.7.2001. The defendants stated in the written statement that they were also taking necessary steps to challenge the decree passed in O.S.No.28 of 1998.
29. The appellant/plaintiff filed Ex.A-6, the summons in respect of the application for ‘attachment before judgment’ (ABJ) filed by one Sundaramoorthy, in O.S.No.238 of 2001 on the file of the Sub-Court, Bhavani, and the said summons contained the present suit properties. Ex.A-7 is the affidavit in the I.A.No.770 of 2001 in O.S.No.238 of 2001, filed for furnishing security towards the suit claim, failing which, ABJ was sought for. Ex.A-8 is the judgment in O.S.No.238 of 2001, dated 21.12.2001, in which it was mentioned that the suit has been settled out of Court.
30. There is no dispute that the appellant/plaintiff is in possession of the suit properties. The trial Court dismissed the suit, stating that even though six months’ time was agreed upon for execution of the sale agreement dated 16.7.2001, but the appellant/plaintiff was never ready and willing to perform his part of the contract and he issued suit notice to the defendants only on 5.3.2002 and so, the trial Court presumed that the appellant/plaintiff was not ready and willing to perform his part of the contract as per Section 16 of the Specific Relief Act. But the above finding of the trial Court is erroneous. Though it is true that six months’ time was agreed upon, it is well settled principle of law that for the sale agreement in respect of the immovable property, inspite of the fact that time is not the essence of contract.
31. Furthermore, the plaintiff received the notice dated 30.1.2002 in respect of the suit properties relating to O.S.No.238 of 2001 filed by one Sundaramoorthy and in the said suit in O.S.No.238 of 2001, Ex.A-6 suit summons show that the said Sundaramoorthy filed application for ABJ. He filed the said application for ABJ on 6.9.2001 and also obtained order of “ABJ” on 20.10.2001. While perusing Ex.A-7 affidavit in I.A.No.770 of 2001 in O.S.No.238 of 2001, it is seen that an endorsement has been made by the Judge on 20.10.2001 that counter and security not furnished, attach by 23.11.2001. But subsequently, the suit was disposed of 21.12.2001, stating that compromise memo filed and the suit was disposed of having been settled out of Court. Considering the said aspect, since one Sundaramoorthy has filed the suit in O.S.No.238 of 2001 and obtained an order of ex-parte order of ABJ, immediately, as soon as he received Ex.A-3 notice sent by Shanmugasundarm, the plaintiff sent a notice to the respondents/defendants which shows that the appellant/plaintiff was very diligent in getting the properties free from all encumbrances.
32. At this juncture, learned counsel for the appellant/plaintiff contended that merely because the appellant/plaintiff/agreement-holder did not issue notice within the stipulated time, it will not bar the claim of discretionary relief. In this regard, he relied on the decision of the Apex Court reported in 2000 (6) SCC 420 (cited supra), wherein, it was held in the facts and circumstances of the case, the ground of delay cannot be invoked to deny the relief to the plaintiff therein. In the present case, the sale agreement is dated 16.7.2001; the plaintiff received notice Ex.A-3 from one Shanmugasundaram on 30.1.2002; the plaintiff also received summons in the application for ABJ under Ex.A-6. Immediately, the appellant/plaintiff issued notice under Ex.A-4, dated 5.3.2002 and the defendants issued reply notice under Ex.A-5 dated 22.3.2002. The plaintiff filed the present suit in O.S.No.16 of 2003 on 3.4.2002. So, the trial Court’s finding that the appellant/plaintiff has not issued within the time stipulated in the sale agreement Ex.A-1, is fatal to the case of the plaintiff, is erroneous .
33. Now, this Court has to consider the evidence let in by both parties. Admittedly, Ex.A-1 sale agreement was executed for sale consideration of Rs.4,25,000/-. The receipt of Rs.1,50,000/- is is admitted by both sides. The appellant/plaintiff filed Ex.A-2 undated cheque issued by the first respondent to the plaintiff for Rs.1,00,000/- and argued that the respondents/defendants have received Rs.1 lakh for discharging some debt and he gave an undertaking that it should be given credit to as a part of the sale consideration and till then, for security purpose, the first defendant issued Ex.A-2 undated cheque to the plaintiff. Admittedly, the signatory of Ex.A-2, namely, first respondent/D1, was not examined before Court. Only the second respondent/D2 deposed before Court as DW.1 and he has fairly conceded that the signature is of his brother, the first respondent/D1. So, I am of the view that this Court can safely presume that Ex.A-2 undated cheque has been given after receipt of Rs.1 lakh from the appellant/plaintiff for the sale consideration. So, the total amount paid is Rs.2,50,000/- and the balance is Rs.1,75,000/- from out of the total sale consideration of Rs.4,25,000/-.
34. Learned trial Judge, while relying on a few sentences from the deposition of P.W.1 (plaintiff), to the effect that, @///jhth brhj;ij ehd; fpiuaj;jpw;F th’;f tpUg;gkpy;iy ///@ and further that, @ ///16/7/2001 njjpapy; ehd; fpiuak; bra;a jahh; epiyapy; ,Ue;Jk; KG bjhifa[k; brhLf;ftpy;iy vd;why; me;j neuj;jpy; vd;dhy; KGj; bjhifa[k; bfhLf;f Koatpy;iy///@ Considering the said evidence of P.W.1/plaintiff, the trial Court held that he was not always ready and willing to perform his part of the contract.
35. While considering the above deposition of P.W.1/plaintiff, it can be seen that on the date of execution of Ex.A-1 on 16.7.2001, he was not ready with the full sale consideration. But on that date, he paid Rs.1,50,000/- and subsequently, he paid Rs.1 lakh.
36. In such circumstances, as per the decision reported in 2002 (2) MLJ 112 (cited supra), the purchaser should be ready with either the funds or should be possessed of the capacity to generate funds within the time stipulated. He should also have the necessary willingness of mind to complete the sale from the inception. The purchaser need not jingle coins or produce the money unless called upon to do so by the Court. There is no evidence to show that the parties were not capable of generating funds. Hence, I am of the view that the trial Court committed error in coming to the conclusion that the appellant/plaintiff was not ready and willing to perform his part of the contract, since on the date of sale agreement on 16.7.2001, he was not ready with entire sale consideration. So, the above finding of the trial Court that the appellant/plaintiff was not always ready and willing to perform his part of the contract, is erroneous.
37. Learned counsel appearing for the respondents/defendants relied upon the decision of the Apex Court, reported in 1995 (5) SCC 115 (N.P.Thirugnanam Vs. Dr.R.Jagan Mohan Rao), wherein, the Supreme Court held as follows:
“5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act 1963 (for short, ‘the Act’). Under Section 20, the court is not bound to grant the relief just because there was a valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had 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 those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his 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 contract.” (emphasis supplied).
38. In the said citation (1995 (5) SCC 115), the trial Court has given a direction to the intended purchaser/agreement-holder/plaintiff to deposit the amount within the stipulated time, but he neither deposited the amount of sale consideration, nor furnished the guarantee within the stipulated period in compliance of the order of the trial Court. But, in the case on hand, the respondents/defendants raised a plea that Ex.A-1 is executed as the security for the loan and not as the sale agreement. They never pleaded that the appellant/plaintiff was not ready and willing to perform his part of the contract. But however, the appellant/plaintiff pleaded and proved that he was always ready and willing to perform his part of the contract.
39. Learned counsel for the respondents/defendants relied on the decision of the Supreme Court reported in 1996 (4) SCC 526 (His Holiness Acharya Swami Ganesh Dassji Vs. Sita Ram Thapar), in which, the Apex Court observed as follows:
“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. …”
40. Learned counsel for the respondents/defendants also relied on the decision of the Supreme Court reported in 2010 (6) CTC 901 = MANU/SC/0977/2010 (M/s.J.P. Builders and another Vs. A.Ramadas Rao and another), wherein the Apex Court held as follows:
“9. The words “ready” and “willing” imply that the person was prepared to carry out the terms of the contact. The distinction between “readiness” and “willingness” is that the former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness.
… ….. ….
11. In P.D’Souza Vs. Shondrilo Naidu MANU/SC/0561/2004 : (2004) 6 SCC 649, paras 19 and 21, this Court observed:
“It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the facts and circumstance of each case. No strait-jacket formula can be laid down in this behalf…. The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale.”
12. Section 16(c) of the Specific Relief Act, 1963 mandates “readiness and willingness” on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. It is also clear that in a suit for specific performance, the plaintiff must allege and prove a continuous “readiness and willingness” to perform the contract on his part from the date of the contract. The onus is on the plaintiff. It has been rightly considered by this Court in R.C.Chandiok and Anr. v. Chuni Lal Sabharwal and Ors., MANU/SC/0033/1970 : (1970) 3 SCC 140 that “readiness and willingness” cannot be treated as a straight jacket formula. This has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned. It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. “Readiness and willingness” to perform the part of the contract has to be determined/ascertained from the conduct of the parties.”
41. From the above citation, it is clear that “readiness and willingness” to perform the contract, has to be determined/ascertained from the conduct of the parties.
42. At this juncture, it is appropriate to notice the decision of the Supreme Court reported in 2008 (11) SCC 45 (cited supra), wherein, it was held that the conduct of the defendant cannot be ignored while weighing the question of exercise of discretion for decreeing or denying a decree for specific performance.
43. Learned counsel for the appellant/plaintiff mainly focussed upon the judgment of the trial Court and submitted that the respondents/defendants have taken a false plea that Ex.A-1 is only security for the loan obtained as “Bokkiam” (nghf;fpak;) usufructuary mortgage. However, the trial Court and this Court, in the earlier paragraphs of this judgment, came to the conclusion that Ex.A-1 is only a sale agreement. The appellant/plaintiff received the notice under Ex.A-3 from Shanmugasundaram and the properties were attached which is evident from Ex.A-6 summons and Ex.A-7 affidavit in I.A., and so, the appellant/plaintiff issued notice under Ex.A-4 and filed the suit within a year from the date of Ex.A-1. He never abandoned the sale agreement and so, the conduct of the defendants cannot be ignored while weighing the question of exercise of discretion for decreeing or denying the decree for specific performance.
44. While applying the said decision reported in 2008 (11) SCC 45 (cited supra) to the facts of the present case, and the rise in price of the properties in question, the respondents/defendants have raised a false plea that Ex.A-1 sale agreement is not intended for the sale of the properties, and it is only as “Bokkiam” (nghf;fpak;) (usufructuary mortgage), and the said plea has not been substantiated by the defendants, by letting in evidence, oral or documentary. So, the trial Court and this Court came to the conclusion that Ex.A-1 is only a sale agreement.
45. It is also worthwhile to notice that as per Article 54 of the Limitation Act; the limitation stated therein is three years and the time from which the period begins to run is the date fixed for the performance or if no such date is fixed, when the plaintiff has notice that the performance is refused. While applying Article 54 of the Limitation Act, the appellant/plaintiff was having time of three years from 22.3.2002, i.e. the date on which the defendants replied to the plaintiff’s notice and the suit has been filed on 3.4.2002 and so, the suit is not barred by limitation. Though time is not the essence of the contract in respect of the sale agreement, the appellant/plaintiff has taken effective steps to get the sale agreement executed. The trial Court committed error in dismissing the suit on the ground that the appellant/plaintiff was not always ready and willing to perform his part of the contract. The trial Court’s findings are not sustainable. Point (ii) is answered accordingly.
46. Points (iii) and (iv) : In view of the answer given to points (i) and (ii) as above, holding that Ex.A-1 is a sale agreement and the appellant/plaintiff was always ready and willing to perform his part of the contract and the respondents/defendants neither disputed the readiness and willingness, nor disputed the financial status of the appellant/plaintiff; but however, the appellant/plaintiff proved that he was always ready and willing to perform his part of the contract and therefore, the appellant/plaintiff is entitled to the discretionary decree of specific performance. The trial Court’s judgment and decree are not sustainable and liable to be set aside.
47. In the result:
(a) The First Appeal is allowed, with costs.
(b) The judgment and decree of the trial Court are set aside.
(c) The suit is decreed as prayed for in the plaint, with costs.
(d) Two months’ time is granted for execution of Ex.A-1 sale agreement by the respondents/defendants.
(e) The Miscellaneous Petition is closed.
cs
To
1. The Additional District Judge, Fast Track Court No.4,
Bhavani, Erode District.
2. Record Keeper, V.R. Section, High Court,
Madras