ORDER
N.Y. Hanumanthappa, J
1. These two appeals arise out of a judgment and decree passed in OS No.1 of 1997 on the file of the learned IV Additional District Judge, Tirupati, decreeing the suit filed by the plaintiffs.
2. Defendants 1 to 4 are the appellants in AS No.1108 of 1997 and defendants 5 to 10 are the appellants in AS No.939 of 1998.
3. Originally the suit in OS No. 143 of 1987 was filed by the plaintiffs on the file of the Principal Sub-Court, Tirupati for specific performance of an agreement of sale dated 17-1-1986 and for a direction to the defendants to execute a sale deed in
respect of the plaint schedule properties after receiving Rs.20,75,000/- from the plaintiffs and in default to have the sale deed executed through the Court. Later the said suit was transferred to IV Additional District Court and renumbered as OS No.1 of 1997. In these appeals the parties arc referred to as arrayed in the suit.
4. Defendants 1 to 3 are interrelated to each other. 2nd defendant is the wife of the 1st defendant. The 3rd defendant is the daughter of defendants 1 and 2. They were running a partnership business in the name and style of M/s. Lakshmi Paradise, the 4th defendant, which is a registered firm.
5. The plaint averments, in brief, are that defendants 1 to 4 had incurred a lot of debts in constructing a cinema theatre called Leela Mahal, situated at Door No.850, Gandhi Nagar, Tirupati. It appears that as their creditors filed several suits against them, defendants 1 to 3 wanted to sell away the cinema theatre to clear of their debts. There were negotiations between the plaintiffs and the defendants and as a result of which the plaintiffs agreed to purchase the plaint schedule theatre for a sum of Rs.27,25,000/- and on 17-1-1986 an agreement of sale, Ex.A1, was executed between the plaintiffs and the defendants. Under Ex.Al the plaintiffs paid to the defendants a sum of Rs.3 lakhs as an advance and it was agreed by the plaintiffs to pay the balance amount of Rs.24,25,000/-to defendants 1 to 4 within a period of six months from the date of the agreement and on that the defendants should execute a sale deed in their favour.
6. Defendants 1 to 4 gave a list of their creditors in the B-Schedule to the agreement. It is categorically stated in Ex.A1 that except the B-Schedule liabilities, they have not incurred any other debts or created any kind of charge over the schedule theatre. It is further stated in Ex.A1 that excepting a collateral security byway of deposit of title deeds to one W.S. Seetharamam, they have not created any other encumbrance or charge over the schedule theatre. Defendants 1 to 4 have given an undertaking to execute a separate indemnity bond to indemnify the plaintiffs in the event of their sufferance in the transaction. Ex.Al provides for extension of time fixed therein, if for any reason beyond the control of either party the transaction could not be completed.
7. It appears that after the agreement defendants 1 to 4 representing that their creditors were pressing to clear of the debts asked the plaintiffs for further advance of money under Ex.A1, but they never gave any proof of their attempts to secure the necessary clearance certificate from the concerned authorities. It was also averred that the plaintiffs paid to defendants 1 to 4 several amounts totaling Rs.3.5 lakhs between 6-4-1986 to 31-5-1986, which payments were endorsed in Ex.A1 and signed by defendants 1 to 4. Thus defendants 1 to 4 received a total sum of Rs.6.5 lakhs towards the sale consideration. It was also averred that though the agreement stipulates that the sale consideration should be paid to defendants 1 to 4, it was understood and agreed upon that since there were large number of creditors, they should be paid by the plaintiffs after defendants 1 to 4 negotiated with them to secure concession in interest. The plaintiffs wanted defendants 1 to 4 to take early steps to meet their creditors and quantify the amounts payable to them.
8. It also appears that inspite of the repeated request of the plaintiffs for an early execution of the sale deed in their favour, defendants 1 to 4 did not take steps to get clearance from Income-tax and Municipal authorities and Sales Tax as undertaken by them. Though an amount of Rs.6.5 lakhs was paid by the plaintiffs, the defendants did not appear to have
discharged any of their debts from out of the said sum received from the plaintiffs, but, strangely on 11-7-1986 defendants 1 to 4 wrote a letter to the plaintiffs stating that they were trying to settle the debt of W.S. Seetharaman and his brother and it would be finalised at any time and that they would extend the period for performance of the agreement by three months from 17-7-1986. It was further averred that defendants 1 to 4 required a sum of Rs.6.37,015/- to discharge some other debts and in that behalf they gave a list of their other creditors in the said letter. Defendant 1 to 4 requested the plaintiffs to accommodate them with another sum of Rs.6.5 lakhs in addition to an amount of Rs.6.5 lakhs already received by them as an advance. By seeing the said letter, it was stated, that the plaintiffs were shocked because the existence of these debts were not disclosed at the time of (he execution of the agreement, and on the other hand the agreement clearly recited that except the debts in the B-ScheduIe, there were no other debts.
9. It was also averred that in view of the strange attitude of defendants 1 to 4, the plaintiffs became suspicious about the bona fides of defendants 1 to 4 and also suspected if there was full disclosure of all the liabilities. On enquiries the plaintiffs came to know that apart from the suits mentioned in the B-Schedule to the agreement the suits in OS Nos.170, 206, 114 of 1984 and 111 and 193 of 1985 had been filed on the file of the Sub-Court, Tirupati, It was alleged that the defendants had the total liabilities to a tune of Rs.23,28,892/- as is evident from the suits filed against them. Tn addition to this amount as per the letter dated 11-7-1986 wherein a list of creditors were given, defendants had the liabilities to a tune of Rs.6,37,015/-. Thus it was concluded by the plaintiff that the total liabilities of defendants 1 to 4 would exceed the sum of Rs.20,75,000/- payable to them under the contract. Since there was no progress in convening a meeting of the creditors to enable the plaintiffs to quantify finally the debts of defendants 1 to 4 and the payments made, on 6-10-1986 issued a legal notice calling upon the defendants to give a full and accurate amount of their liabilities, secured and unsecured, inclusive of Court fees and interest in all cases where suits have been filed and fix a date for them to be present at Tirupati when the creditors of defendants 1 to 4 could be brought and negotiated for settlement, ft was also averred that the plaintiffs also called upon defendants 1 to 4 to give an account of the municipal tax, income tax and the sales tax dues so that plaintiffs could pay the taxes and secure receipts and, it appears, they desired a date to be fixed for the execution of the sale deed.
10. Thereafter defendants 1 to 4 sent a telegram on 14-10-1986 to the effect that they were ready to perform their obligation. According to the plaintiffs, the telegram reads as follows :
“Creditors should be paid. Agreement expires on 17th. Pay balance and take sale deed. Else advance forfeit.”
11. Thereupon the plaintiffs immediately sent a telegram to defendants 1 to 4 to the following effect :
“Received your telegram on 14-10-1986, demands mentioned in our legal notice not complied with, you are hereby once again required to comply with our notice and intimate your willingness for the same immediately. Your failure to comply with demands mentioned in our notice amounts to repudiation in your part. We have been ready and willing to perform our part of the contract. There are no laches on our pan. Allegations in your telegram that the agreement expires on 17th or 18th instant and rights
regarding advance paid by us will be forfeited are denied, and the same are not correct. Wire your willingness forthwith for complying with our notice, otherwise legal action against you is imminent and you will be liable for our costs.”
12. To the said telegram of the plaintiffs defendants 1 to 4 on 18-10-1986 sent a reply requiring the plaintiffs to come to Tirupati in the first week of November after Deepavali to complete the transaction and assuring the plaintiffs that by that time they would request the creditors to come and collect their dues after mutual consultations. On 31-10-1986 the plaintiffs wrote through their advocate to defendants 1 to 4’s advocate that they were unable to go to Tirupati in the first week of November, 1986 and suggesting that the meeting of the creditors could be convened on November 22, 1986.
13. However, according to the plaintiffs, on 15-11-1986 Sri Dorai Raj, the defendant’s advocate wrote to the plaintiff’s advocate that November 22, 1986 is not convenient for him and therefore wanted the plaintiffs to go over to Tirupati for a final discussion on November 28, 1986. The plaintiffs replied to him through their advocate on 22-11-1986 expressing their willingness to go over to Tirupati on 28-11-1986 and informing him that they would be at his office at 10 a.m., on that date. The plaintiffs in the meanwhile learnt that Sri Dorai Raj might not be available at Tirupati on 28-11-1986 and therefore they sent a telegram to him on 26-11-1986 to confirm telegraphically whether he would be available on 28-11-1986. The plaintiff s advocate G.Subramanyam also wrote a letter to Sri Dorairaj on 5-12-1986 by registered post requiring intimation of the next date since the creditors meeting slated for 28-11-1986 had been postponed due to Sri Dorairaj’s absence.
14. It appears, thereupon on 16-12-1986 Sri Dorai Raj wrote to G. Subramanyam stating that the plaintiffs need not bother about several unsecured creditors of defendants 1 to 4 and that the plaintiffs could deposit the amounts due under the mortgage suits and other suits where attachments have been taken and requested the plaintiffs to confine themselves only to those things and inform the date for the next meeting. Again the plaintiffs on 2-2-1987 through their advocate wrote a letter to Sri Dorairaj in reply to his letter dated 16-12-1986 stating that according to their calculations the total liabilities under the mortgage suits and the other suits aggregated to Rs.25,58,920/- and that yet another suit for recovery of Rs.21,675/- was learnt to have been filed in OS No.690 of 19S6 on the tile of the District Munsif Court, Tirupati against the defendants and that a sum of Rs.70,000/- was learnt to be due towards Municipal taxes, apart from the sum of Rs.6,37,025/- mentioned by defendants 1 to 4 in the letter dated 11-7-1986 to be due to other creditors. If was further stated that when the plaintiffs met Sri Dorairaj, at his office at Tirupati on 24-1-1987 and appraised him about all the facts, he promised to get defendants 1 to 4 on 7-2-1987 to Tirupati for settlement of the claims covered by mortgages, attachments and undertakings referred to and get a sale deed executed free from any encumbrance. It appears that the plaintiffs made it known in the notice that they would be present in the office of Sri Dorai Raj at 10a.m.. on 7-2-1987 and a copy of the notice was also sent to defendants 1 to 4 by registered post.
15. According to the plaint averments, the plaintiffs on 7-2-1987 went to Tirupati and met Sri Dorai Raj, but defendants 1 to 4 did not come at all even though word was sent to them that the plaintiffs had come. Sri Dorai Raj also did not have the information about defendants 1 to 4. On
16 and 17th March, 1987, it appears, since defendants shifted their residence to Bangalore to House No. 14, 4th cross, 11th Main, Jayanagar, along with one Mr. Ramana, the plaintiffs went to the residence of defendants I to 3 at Bangalore and met the 1st defendant, who in turn told the plaintiffs that his wife and daughter had gone to attend a marriage and therefore wanted the plaintiffs to come at 7 p.m. When plaintiffs went to the house again on the appointed time, the 3rd defendant, who was present there, informed the plaintiffs that defendants 1 and 2 had left the house on an urgent work and they would not be available even on the next day. The plaintiffs complain that they had every reason to conclude that defendants 1 and 2 were deliberately avoiding meeting them. The allegation of the plaintiffs is that defendants 1 to 4 had suppressed admittedly the existence of several other liabilities at the time of the execution of the agreement. The conduct of the defendants from the beginning has also been evasive and not straight forward. In a very rough calculation the total liabilities of defendants 1 to 4, according to the plaintiffs, aggregated to more than Rs.23,28,892/- apart from the income tax and sales tax dues, whose extent is not know. It was not mentioned in the letter dated 11-7-1986 of the defendants, the liabilities the defendants had.
16. The further averment in the plaint is that if the debts are left undischarged by defendants 1 to 4 after receiving the sale consideration from the plaintiffs, there is every likelihood of the creditors proceeding against the schedule property for satisfaction of their dues. It was alleged that the defendants I to 4 by their acts and conduct have committed default in performance of contract. The plaintiffs stated that they are always ready and willing to perform their part of the contract and get the sale deed executed in their favour, but defendants 1 to 4 are avoiding to perform their part of their contract and to execute the sale deed in favour of the plaintiffs.
17. It was alleged that defendants 1 to 4 alienated portions of the suit property to defendants 5 to 10 pending the suit and that the said alienations are hit by the principles of lis pendens and hence not binding on the plaintiffs. The plaintiffs’ claim that in any event defendants 5 to 10, who have purchased portions of the suit property pending the suit with full knowledge of the suit agreement, are therefore added as proper and necessary parties in the suit for proper adjudication and to avoid multiplicity of proceedings.
18. The 1st defendant filed a written statement and a memo on behalf of defendants 2 to 4 adopting the written statement of the 1st defendant was filed. It was admitted in the written statement the relationship of the parties, the indebtedness of defendants 1 to 4, their intention to sell the suit properties to discharge the debts, the payment of the advance and the filing of the suit by the other creditors. It was also admitted in respect of the undertaking given to execute a separate indemnity bond indemnifying the plaintiffs in the event of their suffering if any in the transaction. It was further admitted with regard to the provisions in Ex.A1 for extension of time fixed for perfonning the contract. It was denied the plaintiff’s meeting W.S. Seetharaman one of the creditors, to settle the matter amicably, so that they could take a sale deed. It was also admitted with regard to the part payments as noted in the plaint.
19. It was stated in the written statement that the contract of sale is covered by an agreement containing stipulations, that the sale consideration should be paid to defendants, that it was understood and agreed that since there were large number of creditors they should be paid by the plaintiffs after the defendants negotiated with
them to secure concessions in interest, that the plaintiffs are trying to read something which is not there in the agreement and that it was not understood nor there was any need or reason to allow the plaintiffs to call all the creditors of the defendants and to make payments after getting concession. It was denied mat the plaintiffs wanted the defendants to take early steps to meet their creditors and to quantify the amounts payable to them and that it is the liability of the defendants who have been directly contacting the creditors on whose behalf W.S. Seetharaman had been conducting cases.
20. According to defendants 1 to 4 the defendants could not take steps to get clearance from income tax authorities because all along there was no assessment at all and only advance tax was being paid and therefore it is a laborious task to get income tax clearance certificate. As regards sales tax, which arose on account of imposition of tax on the seat basis, mere was problem with sales tax authorities who had deposits from this defendant and for which there need not be any clearance as such and whatever amount was payable to them could have been adjusted from the sale consideration. It was stated that there was no need to get any clearance certificate from Municipal authorities. The plaintiffs were made aware even at the time of the sale agreement that the theatre was not assessed to property tax and when the first assessment was made it was abnormal ai the rate of Rs. 16,000/- per year and therefore, the defendants filed a civil suit in District Munsif Court, Tirupati challenging the assessment and obtained an order of injunction restraining the Municipality from collecting the enhanced tax which is still in force and this fact was made clear to the plaintiffs at the time of agreement. It was denied that the defendants have not at all discharged any of their debts from the advance amount of Rs.6.5 lakhs and in any event it is not for the plaintiffs to suggest to which creditors the defendants should pay first. The defendants admit that on 11-7-1986 they wrote a letter to the plaintiffs expressing their efforts to settle the debt of W.S. Seetharaman and his brother, but they have extended the period of performance by three months from 17-7-1986. It was stated that it was true that the defendants required another sum of Rs.6,37,015/- to discharge some other debts and gave a list of their other creditors. It was made clear in the letter dated 11-7-1986 that the agreement would be extended if the amount was paid. It was further stated that in the agreement only the debts that became subject matter of litigation were mentioned and other unsecured debts and sundry debts were not mentioned and it was for the defendants to make their own arrangements and the plaintiffs could not have any say in the matter of discharge of debts. The plaintiffs, according to the defendants, could only insist upon free of encumbrance and free of attachment over the cinema theatre and nothing else. It was a fact that after the agreement of sale certain suits were filed, but it is no part of the business of the plaintiffs to make an enquiry regarding the financial stability or the method and manner in which they utilise the sale consideration or the advance amount covered by the agreement. The plaintiffs have no business to calculate the liabilities of the defendants and to complain that the debts exceeded the balance of sale consideralion. They can demand a clear title to the property free from encumbrances, of course, with income tax clearance certificate. Evidently, letters and telegrams were being sent and returned by the defendants periodically to create an impression that the defendants were at fault that they were violating the agreement and that the plaintiffs alone were ready to push through the agreement.
21. It was further stated that the defendants sent a telegram on 14-10-1986
expressing without any ambiguity that the creditors should be paid and that the agreement would expire by 17th October. It appears that there was a specific demand for the balance of amount and a request to obtain a sale deed and it was made clear that in the event of failure, the advance amount would be forfeited. In reply to this telegram the plaintiffs issued a telegram again demanding compliance with the notice dated 6-10-1986. It was for the first time that the plaintiffs claimed that the time was not the essence of contract and threatened legal action. The defendants allege that it is clear from the conduct of the plaintiffs that they are not interested at all in purchasing the property and they are afraid of some unknown creditors who might come and claim the money from the property covered by the agreement. The fear is purely imaginary and the plaintiffs being persons from merchant community could not take any fixed stand in their dealings with the defendants. The defendants, as is stated in the written statement, have not committed any default in the performance of the contract. It is the plaintiffs who having come forward to purchase the property and after paying Rs.6.5 lakhs got frightened that the property might be enforced by any other creditor and therefore they have been delaying the matter. The alleged readiness and willingness by the plaintiffs, according to the defendants, is not a true and genuine offer. The defendants had intimated the plaintiffs that they would loose the contract and the amount would be forfeited if further amount is not paid without paying any further amount the plaintiffs had been periodically corresponding with the defendants with no purpose. By their own conduct and acquiescence the plaintiffs violated the terms of the contract and therefore the defendants forfeited the advance amount. The defendants allege that the plaintiffs have not come with clean hands and they are not entitled to the discretionary relief of specific performance. The defendants, having agreed to sell the property to discharge their liabilities, had been anxiously wailing for the plaintiffs to come and pay the amount and take a sale deed, but unfortunately they have not done so and on the other hand started making a roving enquiry into the assets and liabilities of the defendants and also inventing the possible creditors who might come in future. It was alleged that it is a case of anticipatory breach of contract committed by the plaintiffs and they cannot now turn round and complain against the defendants.
22. Defendants 1 to 4 filed an additional written statement stating, inter alia, that defendants 5 to 10 are neither proper nor necessary parties. The 5th defendant filed a separale written statement and the defendants 6 to 10, who purchased the portion of the schedule property during the pendency of the suit, filed a memo adopting her written statement. Denying various allegations made by the plaintiffs it was stated by the 5th defendant in her written statement that they were not aware of the suit agreement and they have nothing to do with it and as such it is not binding on them.
23. The trial Court, basing on the pleadings, framed the following issues:
(1) Is time the essence for suit agreement of sale?
(2) Whether plaintiffs arc ready and willing to perform their part of the contract?
(3) Are plaintiffs entitled for specific performance of the agreement of sale dated 17-1-1986 in respect of plaint schedule property?
24. The trial Court also framed the following two additional issues:
(1) Whether the defendants 5 to 10 are alienees and urchasers of the plaint
schedule properties subsequent to filing of the suit?
(2) Whether the defendants 5 to 10 are unnecessary parties to the suit?
25. To prove their case the plaintiffs examined the 1st plaintiff, Bangi Sree Ramaiah Chetty, as PW1 and marked Exs.A1 to A28. On behalf of defendants 1 to 4, the 2nd defendant herself examined as DW1 and one Y. Sreenivasulu Reddy was examined as DW2 and marked Exs.B1 to B4.
26. The trial Court reiying on the entire evidence, both oral and documentary, adduced by both the parties, found that the plaintiffs are always ready and willing to perform their part of the contract and held that they are entitled for the specific performance of the suit agreement of sale in respect of the plaint A-Schedule properties. With regard to additional issues the trial Court found that when once the Court arrives at a conclusion that the plaintiffs arc entitled for the relief of specific performance of contract, defendants 5 to 10 claiming to be the subsequent purchasers would have no legs to stand and automatically cease to have any rights in the suit property and held that defendants 5 to 10 are not the bona fide purchasers for value without notice of Ex.A1 agreement. Accordingly the suit was decreed in favour of the plaintiffs as prayed for.
27. Aggrieved by the judgment and decree passed by the trial Court, defendants 1 to 4 filed AS No.1108 of 1997 and defendants 5 to 10 filed AS No.939 of 1998.
28. Sri Challa Sitaramaiah, learned senior Counsel appearing for Sri M. Adinarayana Raju, learned Counsel for defendants 1 to 4-appellants submits that the plaintiffs agreed to purchase the suit property subject to mortgage and agreed to discharge the debts, which they have not done and that the explanation given by the plaintiffs that they came to know that there are some more debts and therefore they did not pay the amount, cannot be accepted since there is a mention in Ex.Al, dated 17-1-1986 itself that the plaintiffs have nothing to do with other debts and the vendors, defendants 1 to 4, will discharge them. He further submits that the demands of the plaintiffs asking the defendants to produce all their creditors before them for a meeting is not warranted, that the intention of the plaintiffs is to keep the correspondence without payment and gain time and the correspondence and exchange of notices were in respect of their demand tor the production of the creditors and not for extending the period of six months covered by the agreement and that the trial Court without properly considering all these aspects decided the issues in favour of the plaintiffs. He also submits that since no relief has been sought by the plaintiffs against defendants 5 to 10 and also no declaration has been asked to set aside the alienation in favour of defendants 5 to 10, no decree or any relief can be passed against defendants 5 to 10. He also submits that Exs.B1 to B3, dated 26-6-1991, sale deeds executed by the 1st defendant conclusively establish the contentions urged in the written statement and that the trial Court without giving any credence or relying upon those documents erroneously decreed the suit filed by the plaintiffs. The learned Counsel for the appellants further submits that though a telegram dated 14-10-1986 was sent by the defendants 1 to 4 stating that the agreement, Ex.Al was getting expired on 17-10-1986 and also requesting the plaintiffs to pay the balance of the sale consideration and to take out the sale deed, the plaintiffs instead of complying with the telegraphic notice to perform their part of the contract wanted the defendants to comply with their demand. Therefore this act of the plaintiffs shows that they are never ready and willing to perform their part of the contract. Insofar as
laches on the part of defendants 1 to 4 are concerned, the defendants submit that they have disclosed to the plaintiffs their liabilities, that because of institution of suits against them were all made in the years 1984 and 1985, which the plaintiffs are well aware, the defendants have been taking steps to oblain income tax and sales lax clearances and it is due to the delay on the part of the authorities the same could not be obtained and that therefore there are no laches on the part of defendants 1 to 4 to perform their part of the contract. Lastly the learned Counsel for the appellants contends that the decree passed by the trial Court without appreciating the entire evidence, both oral and documentary, cannot be sustainable in law and therefore the suit is liable to be dismissed.
29. What are the terms of the agreement entered into between the parties and conditions imposed therein, it is necessary to go through the contents of the agreement of sale, Ex.A1, dated 17-1-1986. which document center round the litigation between the parties to appreciate the rival contentions. The relevant portion of Ex.A1, dated 17-1-1986 entered into between the parties reads as follows :
“xxxxx
XXXXX
And whereas the vendors herein are the absolute owners with effective title, possession and salable interest are desirous of selling the schedule mentioned property to meet urgent needs and to discharge several debts contracted by them and incurred for the construction of the Theatre.
And whereas the purchasers have agreed to purchase the schedule mentioned property which includes the land, Theatre and the appurtenant, vacant site as mentioned in the schedule and as per the plan appended herewith, with absolute estate in free simple or on estate equivalent thereto with the following encumbrances attachments other claims at the fixed price value of Rs.27,25,000/-subjcct to the terms and conditions contained herein.
The purchasers have paid a sum of Rs.3 lakhs and received the same towards advance by the vendors under this agreement. The purchasers agreed to pay the balance of sale consideration namely Rs.24,25,000/- to the vendors within a period of six months from the date of this agreement and on receipt of the same, the vendors hereby agree to execute and register a regular conveyance deed or in any other manner effecting transfer of the agreement schedule property to create title on the purchasers and the vendors agreed to execute a document at the option of the purchasers cither in their names or in the names of any one suggested by them.
The vendors hereby agreed to give clearance by producing the required certificates from the Income tax authorities and the Municipal Authorities relating to property tax.
The vendors hereby affirm that apart from the debts contracted by them as mentioned in the particulars furnished under the list appended to this agreement, they have not incurred any other debt or create any kind of charge over the schedule mentioned property and if any such claim is made by any other persons, the vendors hereby agree that they will clear such debts and in case of any loss sustained by the purchasers on this account shall be reimbursed by the vendors.
The vendors hereby reiterate and affirm that except the offering, the schedule mentioned property as a collateral security by way of deposit of title deeds to Sri W.S. Seetharam, there
are no other similar or subsequent charges over the same Theatre in favour of any body.
xxxxx
xxxxx
It is mutually agreed that in case the vendors failed to comply with the demands of the purchasers as per the conditions of this agreement, the purchasers have the right to enforce this agreement after depositing the entire amount of sale condition and the vendors are liable for the costs and other incidental expenses that may be incurred by the purchasers or refund the earnest money by adding an equal sum of Rs.3 lakhs. Similarly if the purchasers fail to pay the balance of sale consideration within the period of six months from the date of the agreement as agreed upon, this agreement automatically lapses and the advances shall be forfeited.
The vendors hereby agree to execute a separate indemnity bond assuring the purchaser of clear and absolute title without any other encumbrances than the one mentioned in this agreement, if demanded the purchasers at the time of the sale or any other mode of transfer of property in their favour.
It is mutually agreed that in case the parties of this agreement are incapacitated due to any administrative or other circumstances beyond the control of the parties, the time gets extended till the incapacity ceases and the situation for the execution of a conveyance is ready.
xxxxx
xxxxx”
30. A reading of Ex.A1, dated 17-1-1986 it is clear that the plaintiffs agreed to pay the balance of sale consideration within the period of six months from the date of that agreement and on receipt of the same defendants 1 to 4 agreed to execute and register a regular conveyance deed affecting transfer of the schedule property to create title in the purchasers i.e., the plaintiffs. It is also clear that if the plaintiffs fail to pay the balance of the sale consideration within the period of six months from the date of the agreement as agreed upon, the agreement automatically lapses and advance would stand forfeited and in case any of the parties to the agreement are incapacitated due to any administrative or other circumstances beyond the control of the parties, the time gets extended till the incapacity ceases and the situation for the execution of a conveyance is ready. From the recital in Ex.Al, dated 17-1-1986 it is abundantly clear that the parties agreed for extension of time for performing the contract in case any of them are incapacitated due to reasons beyond their control. It is also clear that the parties are flexible in the above as recited in the agreement that they never felt that six months time should be scrupulously followed. In other words the parties to the agreement were not particular that the time should be the essence of the contract.
31. The plaintiffs admit that they agreed to purchase the suit property for a total consideration of Rs.27,25,000/-, and they paid Rs.3 lakhs to defendants 1 to 4 and the balance was agreed to be paid within six months and that subsequently they paid Rs.3,50,000/- towards balance sale consideration between the period 6-4-1986 and 31-5-1986.
32. Evidently notices were exchanged between the parties. Ex.A15 is notice dated 11-7-1986 issued by defendants 1 to 4 to the plaintiffs whereunder they agreed to extend the period for performance of the contract by three months since the six months period as agreed under Ex.A15,
dated 17-1-1986 was to be elapsed by 17-7-1986 for performance of the contract and that the parties could go ahead with the execution of the sale deed even earlier irrespective of the time limit, of the extended period of three months. Thereupon, admittedly, the plaintiffs issued a reply to Ex.A15 under Ex.A16 expressing their readiness and willingness to pay the balance of sale consideration and required the defendants 1 to 4 to give the list of their creditors and to perform their part of the contract. Against this the 1st defendant got issued a telegraphic notice dated 14-10-1986 expressing his willingness to perform his part of the contract and to which plaintiffs issued Ex.A18, dated 15-10-1986. Then the advocate for defendants 1 to 4 issued Ex.A20, notice dated 18-10-1986 mentioning that defendants 1 to 4 were ready to perform their part of obligation and they required the plaintiffs to go over to Tirupati with money during the first week of November, 1986 and finish the transaction. It is evident from the notices issued by both the parties that defendants were not particular about the time for performance of the agreement and in other words they did not insist on their Ex.A17 telegram wherein they required the plaintiffs to pay the balance of sale consideration by 17-10-1986. It is further evident from Ex.A21 reply notice issued by the plaintiffs advocate dated 31-10-1986 expressing their readiness to attend the creditors’ meeting if convened on 22-10-1986 instead of first week of November, 1986. Thereafter the plaintiffs got issued Ex.A23, dated 22-11-1986 expressing their readiness and willingness to go over to the office of the learned advocate for defendants 1 to 4 at 10.00 a.m., on 28-11-1986 and required the defendants to present on that day. Ex.A24 telegram and Ex.A25 letter disclose that the proposed meeting to be held on 28-11-1986 was cancelled as Mr. Dorai Raj the learned advocate for defendants 1 to 4 informed the learned advocate for the plaintiffs that he would not be available on 29-11-1986. Under Ex.A26, dated 16-12-1986 issued by the defendants required the plaintiffs to contact the defendants residing at Bangalore, but of no avail. From all this correspondence between the parties it is clear that the parties never insisted that time should be essence of the contract. Defendants 1 to 4, as is clear from the correspondence, arc also ready and willing to perform their part of the contract even after expiry of the period mentioned in the suit agreement. Defendants in any of the notices stated that the time was the essence of contract and that the suit agreement has lapsed or that they would not execute the sale deed after a particular date made no mention. Therefore even according to the conduct of the parties it is quite evident that the parlies never took any particular date or lime as the essence of the contract.
33. Sri Challa Sitaramaiah, learned senior Counsel appearing for defendants 1 to 4 submitting that though several opportunities and time was given to the plaintiffs and even defendants 1 to 4 were ready and willing to perform their part of the contract to execute the sale deed in favour of the plaintiffs after receipt of balance sale consideration the plaintiffs were never ready and willing to perform their part of the contract, contends that the lime was the essence of the contract and that therefore the plaintiffs arc not entitled for grant of specific performance of the contract. Sri Challa Sitaramaiah, with a view to get the relief sought for attacked the judgment and decree passed by the trial Court as arbitrary and illegal by dividing his grounds of attack into five categories, which read as under:
“(1) If the purpose for which the agreement was entered into, is frustrated, or if there is a breach of a fundamental term (an essential term) the contract cannot be enforced.
(2) Time is the essence of the contract, the conduct of the plaintiffs show that they were not ready and willing to perform their part of the contract according to its true construction.
(3) The Court should take into account the hardship that would cause to the defendants if the relief of specific performance is granted, taking into account the subsequent events also.
(4) Recitals in a deed of” contract are binding on all parties and when the recitals intended to be a statement of all parties to the deed, it is an estoppel upon all.
(5) The plaintiffs who obtained the decree assigned it to third parties for consideration. Compensation in money is an adequate remedy, even if the plaintiffs were able to make out a case for enforcing the agreement.
34. Sri Challa Sitaramaiah contended that when the parties have entered into an agreement incorporating several terms, non-performance of the same amounts to breach of contract. In other words the essential fundamental terms of the contract shall be performed in the manner and method, which the contract prescribes, otherwise it amounts to repudiation of the contract. According to him non-performance of the contract destroys the very substance of the agreement. In support of his arguments he took us through the decision in Lord Diplock in Photo Productions Ltd., v. Securicor Transport Ltd., (1980) 1 All. F.R 556, wherein it was observed as follows:
“The event resulting from the failure of one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract.”
35. Sri Sitaramaiah further contended that entering into agreement of sale, Ex.A1, dated 17-1-1986 was to meet the urgent needs and to discharge several debts contracted by them and incurred for the construction of the theatre. The particulars of the debts are mentioned in the list appended to the agreement, Ex.A1. The plaintiffs were aware that the plaint schedule property was under equitable mortgage with W.A. Seetharaman. Because of mounting pressure from Seetharaman defendants 1 to 4 were forced to enter into the agreement, Ex.A1. The purpose was failed as the plaintiffs refused to deposit the mortgage amount to the credit of the suit and the suit property was brought to sale. In the circumstances defendants 1 to 4 themselves discharged the debts by borrowing elsewhere and by sale of part of the schedule properly. The agreement of sale was only to pay the pressing debts otherwise there was no need to sell the theatre.
36. It was admitted by the 1st plaintiff who was examined himself as PW1 that the plaintiffs did not agree for the conditions imposed in bx.A26, dated 16-12-1986, a reply letter sent by defendants’ advocate to plaintiffs’ advocate. W.S. Sitaraman brought the suit property for sale while executing the mortgage decree and that he did not participate in the sale. PWl admitted that he did not deposit the balance of sale consideration in the Court. I le also admitted that the purchasers have the right to enforce the agreement after depositing the entire amount of sale consideration. It was further admitted that as on the date of the filing of the suit the plaintiffs had not deposited the balance sale consideration. Since the defendants themselves discharged the debts of Sitaraman, there is no reason for the plaintiffs to discharge the debts of the creditors and cannot claim for specific performance of agreement of sale. There was no merit in the contention of the
plaintiffs that they are ready and willing to perform their part of the contract. In this connection they exchanged notices and also requested for convening of meetings. On the other hand as per the terms of agreement and in view of the failure in fulfilling the obligation they are entitled to forfeit the advance money of Rs.6.5 lakhs. According to Sri Sitaramaiah when the purpose for which the agreement was entered into and when such purpose fails the agreement so entered into cannot be enforced. Sri Sitaramaiah maintained that either to grant or refuse to grant specific performance depends upon the terms of contract and ihe terms of the contract must be judged in the light of (he conduct of the parties. The stand of the plaintiffs in not depositing the mortgage debt payable to Seelaratnan was that they may lose the suit property in the Court sale and as such have not deposited the amount. From this, according to the learned Connse1 ibr the appellants, it is clear that the plai.iiiffs were not wiling to pay the amounts. They also did not deposit as on the dat^ of filing of the suit i.e., even by 24-6-1997. To view the problem in the light of the conduct of the parties Sri Sitaramaiah tried to take the support from the following authorities:
N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, ;
Satyanarayana v. Yelloji Rao, ;
P.R. Debt and Associates v. Sunanda Roy, ;
Parakunnan Veetill Joseph’s Son Mathew v. Nedumbara Kuruvila’s Son and others, 1987 (Supp.) SCC 340.
37. In the case of N.P. Thirugnanan (supra), the Supreme Court dealing with a case relating to the grant of specific relief, while interpreting Sections 16(c) and 20 of the Specific Relief Act, held as follows:
“It is settled law that remedy for specific performance is an equitable remedy and is in ihe 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 the 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. The circumstances are material and relevant and is required to 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 the contract.”
38. The Supreme Court in view of the above factual findings and of the legal position, in para-6 continued the findings of the High Court, which reads as follows:
“We have no hesitation in recording the agreement with the finding of the learned single Judge that the plaintiff has hopelessly failed and shown rather reluctance than readiness to perform his part of the contract. In the facts that are noticed in the judgment of the trial Court, which are extracted by us as above, the only possible conclusion is that the plaintiff really was rather reluctant than willing to perform his part of the contract and was at no time ready with either money or resources to fulfil his part of the contract. The other circumstances which are noticed by ihe learned single Judge and are detailed by him in the judgment go to show that the very idea of entering into an agreement with the first defendant alone when the plaintiff-appellant was already informed about tlie death of Dr. R. Snrya Rao and the devolution of his interest upon the first defendant, his mother, his brothers and his sisters, was to somehow or other enter upon the properly, but, the stipulated rent also was not paid by the plaintiff to the defendants. The trial Court has noted that there was no legal necessity for the defendants to part with the suit property and held against the plaintiff that the very contract was speculative in nature and entered into by the plaintiff who has been dabbling in real estate transactions without the means to purchase a substantial immovable property like the suit property and we agree with the same.”
39. In the case (supra), the Supreme Court has laid down a dicta, which reads thus:
“Under Section 22 of the Specific Relief Act, relief of specific performance is disc ret ionary but not arbitrary discretion must be exercised in accordance with sound and reasonable judicial principles. The cases providing for a guide to Courts to exercise discretion one way or other are only illustrative they are not intended to be exhaustive. As Article 1 !3 of the Limitation Act prescribes a period of 3 years from the date fixed there under for specific performance of a contract, it follows that mere delay without more extending unto the said period cannot possibly be a reason for a Court to exercise its discretion against giving a relief of specific performance. Nor can the scope of the discretion, after excluding the cases mentioned in Section 22 of the Specific Relief Act, be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no substituting right or there will be a bar against its assertion. So, [here must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It is really difficult to define that field. Diverse situations may arise which may induce a Court not to exercise the discretion in favour of the plaintiff. It may better be left undefined except to state what the section says, namely, discretion of the Court is not arbitrary, but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal,”
40, Dealing with the above case the Supreme Court referred to a case in Lindsay Petroleum Co. v. Prosper Armstrong Hurd, (1874) 5 CP 221, wherein it was observed:
“Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that
which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay, are most material.”
41. In Caesar Lamare v. Thomas Dixon, (1873) 6 HL 414, Lord Chelmsford said:
“The conduct of the party applying for relief is always an important element for consideration.”
The Supreme Court, therefore, held thus:
“It is clear from these decisions that the conduct of a party which puts the other party in a disadvantageous position, though it does not amount to waiver, may in certain circumstances preclude him from obtaining a decree for specific performance.”
Sri Sitaramaiah then submitted that if the Court feels that the material produced to show that if the performance is to be ordered which results in causing hardship to the other side, it will be inequitable and unjust to grant any relief and places reliance on a decision of the Supreme Court in Parakunnan Veetill Joseph’s Son Mathew v. Nedumbara Kuruvila’s Son and others, (supra), wherein it was held as follows:
“Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvilla could not get the estate and Mathew was not prepared to part with it. The sheet anchor of the suit by Varghese is the agreement for sale Ex.A1. Since Chettiar had waived his rights there under, Varghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance.”
42. The learned Counsel for the appellants quoted the principles enunciated in the book “Fry on Specific Performance” (6th Edition), in which it says as follows:
“421. It cannot, however, be denied that there are cases in which the Court has refused its interference by reason of events subsequent to the contract. Thus in The City of London v. Nash, (3 Atk. 512; SC 1 Vs. Sen 12). where the party had covenanted to re-built several houses, and, instead, had built but two new houses, and only repaired the others, but in so doing had laid out a least 2,201, and put them in very good condition; Lord Hardwick, holding that the covenant was one which in its nature the Court could enforce, yet considered that specific performance would entail so great a loss and hardship on the defendant, and be so useless to the plaintiff, that the Court would not enforce it, whether the descendant had mistaken the sense of the covenant to re-build, or perhaps had even knowingly evaded it. And so again, where a mortgagor had entered into a contract to grant a lease, expecting to obtain the mortgagee’s consent, but failed in this, and was in circumstances which rendered him practically unable to redeem: in a suit instituted by the intended lessee, the Court
refused specific performance, but granted the alternative prayer of the bill for rescission.
422. Notwithstanding these cases the general rule seems to be, that events subsequent to the contract, and not so involved in it as to render it unequal at the time it is entered into, cannot be brought forward to show the hardship of enforcing it. But where the subsequent events alleged for this purpose are acts of the plaintiff himself, or events in some sense within his power, the Court may have regard to them in exercising its discretionary jurisdiction in specific performance. There are cases in which the Court has considered that by means of these events, such a change has taken place in the relative position of the plaintiff and defendant, as to render it inequitable specifically to enforce the contract against the latter.
424. Where the conduct of the plaintiff subsequent to the contract has led the defendant into a trap, though the plaintiff’s conduct may have been unintentionally injurious, the Court will refuse specific performance. Thus, in one case, the contract for sale of leaseholds liable to a covenant to insure stipulated that the contract should be completed on the 20th July: the insurance expired on the 24th June: one of the vendors renewed for a month only, to the 24th July: the contract in fact was not completed before the 26th August, when the parties met for that purpose, and it was discovered that the insurance had expired and the leaseholds had become liable to forfeiture and the purchaser refused to complete.”
43. Sri Challa Sitaramaiah, adverting to his contention that the delay on the part of defendants 1 to 4 would not disentitle them to have a decree in their favour unless it can be shown that time was not the essence of the contract or was made essence of the contract or delay on the part of defendants amounted to abandonment of the contract, he relied upon a decision of the Supreme Court in Mrs. Sandhyarani Sarkar v. Sudharani Debi and others, , wherein it was held thus:
“The High Court reversed the decree of the trial Court holding that the plaintiff purchaser had under one pretest or other put off the taking of the deed of conveyance and delayed performing her part of the contract. The correctness of this finding was seriously assailed on behalf of the appellant. It was urged that the High Court itself has found in this case that time was not the essence of the contract nor was it made essence of the contract because the date for performance was extended on number of occasions. It was urged that this discloses a self-contradictory approach on the part of the High Court when on the one hand it holds that time was neither the essence of the contract nor was it made essence of the contract but on the other refuses decree for specific performance on the only ground that the plaintiff delayed performing her part of the contract. It is undoubtedly true that the High Court has recorded a finding that time was not the essence of the contract nor was it made essence of the contract by a specific notice, but it is equally true that the plaintiff seeks relief for specific performance of contract and it is incumbent upon the plaintiff to affirmatively establish that all throughout he or she, as the ease may be, was willing to perform his or her part of the contract, and that the failure on the part of the plaintiff to perform the contract or willingness to perform her pan of the contract may in an appropriate case disentitle her to relief, one such situation being where there is inordinate delay on the part of the plaintiff to perform
his or her part of the contract and that it how the High Court has approached (he matter in this case. One aspect of the case which deserves notice is that by the terms of the contract the vendor had to put the purchase in possession of the property when conveyance is executed and balance of sale consideration is paid and that was to be done by the end of April, 1956. Even though the plaintiff purchaser had failed to perform any portion of her part of the contract by the end of April, 1956, the Vendor put the plaintiff in actual possession of the first and second floors of the premises to be sold on April 28, 1956 and the plaintiff is in possession of the same till today that is after a lapse of more than 20 years. On the other hand, she deposited after struggle and procrastination the balance of consideration on l-‘cbmary6, 1968 that is nearly 12 years after the date of agreement. The plaintiff thus enjoyed actual possession of the property from April, 1956 to f;ebruary 1968 when she parted with consideration without paying a farthing for the use and occupation of the premises which, on a reasonable construction of the contract, she was not entitled at all, till she parted with the full consideration and took the conveyance. This has undoubtedly weighed with the High Court in coming to the conclusion that ihe plaintiff is disentitled to a relief of specific performance of contract.”
44. The Supreme Court in that case dealing with the contention that the relief of specific performance being discretionary and the Ida! Court having exercised its discretion one way in favour of the plaintiff, the High Court should not have interfered with the same, the Supreme Court further held as follows;
“The High Court examined this contention meticulously. So have we done here. In fact, it prominently appears that the plaintiff put off performing her part of the contract presumably because she had not the necessary wherewithal to take the conveyance when she should be obliged to pay the balance of consideration and having obtained possession stuck on to it without meeting her obligation. If in this background the High Court interfered with the decree of the trial Court, we see nothing objectionable in it. The decree for specific performance in this case has been rightly refused and this appeal is liable to be dismissed.”
45. According to Sri Sitaramaiah, the variation in the contract indicates unwillingness on the part of the party suggesting variation. In such an event such a party to the agreement will have any right to insist upon performance of contract as agreed in view of the law laid down by the Supreme Court.
46. Sri Sitaramaiah maintaining that the terms of the contract had to be performed according to its true construction seeks support from the English Law laid down in George Mitchell v. Finney Lock Seeds, (1983) 1 All ER 108, which reads thus:
“Faced with this abuse of power, by the strong against the weak, by the use of the small print of the conditions, the Judges did what they could to put a curb on it. They still had before them the idol, ‘freedom of contract’. They still knelt down and worshipped it, but they concealed under their cloaks a secret weapon. They used it to stab the idol in the back. This weapon was called ‘the true construction of the contract’. They used it with great skill and ingenuity. They used it so as to depart from the natural meaning of the words of the exemption clause and to put on them a strained and unnatural construction. In case after case, they said that the words
were not strong enough to give the big concern exemption from liability, or that in the circumstances the big concern was not entitled to rely on the exemption clause. If a ship deviated from the contractual voyage, the owner could not rely on the exemption clause. If a warehouseman stored the goods in the wrong warehouse, he could not pray in aid the limitation clause. If the seller supplied goods different in kind from those contracted for, he could not rely on any exemption from liability. -If a shop owner delivered goods to a person without production of the bill of lading, he could not escape responsibility by reference to an exemption clause. In short, whenever the wide words, in their natural meaning, would give rise to an unreasonable result, the Judges either rejected them as repugnant to the main purpose of the contract or else cut them down to size in order to produce a reasonable result.”
47. The learned Counsel for the appellants drawing our attention to Sections 32 and 56 of the Indian Contract Act submitted that this is a case where the doctrine of frustration of contract cannot be invoked and relies upon the decision of the Supreme Court in Ganga Charan v. Firm Ram Charan, . The Supreme Court interpreting the provisions of Sections 32 and 56 of the Indian Contract Act held as follows:
“The enforcement of the agreement in question was, as we have already pointed out, not contingent on the happening of an uncertain future event, nor does the present case fall within the second paragraph of Section 56, which is the only provision which may be said to have any relevancy to the plea put forward by the respondents. Clearly, the doctrine of frustration cannot avail a defendant, when the non-performance of a contract is attributable to his own default.”
48. Sri Sitaramaiah, learned senior Counsel appearing for the appellants then relied upon an English decision in British Movietonews Ltd., v. London & District Cinemas Ltd., (1951) 2 All ER 617, which reads thus:
“….. a Court can and ought to examine
the contracted circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. And if they must have done so, then a term to that effect will be implied though it be not expressed in the contract …..
no Court has an absolving power, but it can infer from the nature of the contract and the surrounding circumstances that a condition which is not expressed was a foundation on which the parties contracted.”
49. Sri Sitaramaiah, relying upon a judgment of the Supreme Court in Satyanarayana v. Yelloji Rao, , submitted that the plaintiffs did not accept repudiation of the contract, but kept the contract alive and committed a breach thereof, with the result that they disqualified themselves to file the suit for specific relief. The Supreme Court in that decision while observing that the question raised in the case is a mixed question of tact and law and interpreting the provisions of Section 22 of the Specific Relief Act, held as under:
“Under Section 22 of the Specific Relief Act, relief of specific performance is discretionary but not arbitrary: discretion must be exercised in accordance with sound and reasonable judicial principles. The cases providing for a guide to Courts to exercise discretion one way or other are only illustrative; they are not intended to be exhaustive. As Article 113
of the Limitation Act prescribes a period of three years from the date fixed thereunder for specific performance of a contract, it follows that mere delay without more extending upto the said period cannot possibly be a reason for a Court to exercise its discretion against giving a relief of specific performance. Nor can he scope of the discretion, after excluding the cases mentioned in Section 22 of the Specific Relief Act; be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no subsisting right or there will be a bar against its assertion. So, there must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It is really difficult to delinc that field. Diverse situations may arise which may induce a Court not to exercise the discretion in favour of the plaintiff. It may better be left undefined except to state what the section says, namely, discretion of the Court is not arbitrary, but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal.”
50. The Supreme Court while referring to the law laid down by the English Law Courts in that case further held as follows:
“While in England mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a Court to refuse such a relief. But as in England so in India, proof of abandonment or waiver of a right is not a pre-condition necessary to disentitle the plaintiff to the said relief, for if abandonment or waiver is established, no question of discretion on the part of the Court would arise….. It is not possible or desirable to lay down the circumstances under which a Court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief.”
51. Sri Challa Sitaramaiah, learned senior Counsel for the appellants in AS No.1108 of 1997 was very analytical in his approach to the case, with a view to convince the Court to reverse the findings and the judgment and decree passed by the trial Court. However, the facts and circumstances dealt with by the English Law Courts and also the Supreme Court, which were relied upon and as extracted supra, are different from the facts on hand. In our view, the decisions cited by the learned Counsel for the appellants are purely academic and since the facts in those cases are different from the facts involved in the present case there is no relevancy whatsoever to the facts of the case on hand.
52. It is to be seen that in Ex.Al, dated 17-1-1986 [hat the sale transaction has to be completed within six months from the date of the agreement, but in the notices and the correspondence between the plaintiffs and defendants 1 to 4 nowhere it is said that time is the essence of the contract and therefore in view of the conduct of the parties it cannot be said that the time is the essence of the contract. It is settled principle of law as laid down by the Supreme Court in Smt. Chand Rani v. Kamal Rani. , that in respect of agreement of sale of immovable property normally time will not be the essence of the contract unless specifically intended and that granting or refusal of specific performance depends on several factors. In that case the Supreme Court
interpreting the provisions of Specific Relief Act observed thus:
“In case of sale of immovable property there is no presumption as time being the essence of the contract. Even if if 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.”
53. The Supreme Court interpreting Section 20 of the Specific Relief Act in P. V. Joseph’s Son Mathew v. N. Kuruvilla’s Son, , held as follows:
“Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of operation to have an unfair advantage to the plaintiff.”
54. Therefore in view of the law laid down by the Supreme Court in the above two cases and , the contention of defendants 1 to 4 that time is the essence of the contract cannot be accepted.
55. Even according to the conduct of defendants 1 to 4 and as affirmed in Ex.A agreement that apart from the debts shown in ‘B’ schedule they have not incurred any other debts nor created any charge over the ‘A’ schedule property and undertook that in case any such claim is made by any other person, they would clear those debts. Therefore it is abundantly clear that defendants I to 3 suppressed their total debts and the names of their creditors and also the sum due to them without mentioning the same in Ex.A1. They have given an impression that they had to clear only the ‘B” schedule debts and nothing more. It is to be seen that in Ex.A16 notice issued by the plaintiffs that it was clearly mentioned that they did not require any time for payment of the balance of sale consideration in full and got the sale deed registered in their favour. The 1st defendant, who was examined himself as DW1, admitted that the plaintiffs are very rich people. For the above reasons it can be inferred that the plaintiffs arc always ready and willing to perform their part of the contract, but no interest whatsoever was shown by the defendants to execute a sale deed in favour of the plaintiffs after receipt of the balance sale consideration and even the defendants never expressed their willingness and readiness to perform their part of the contract.
56. The argument advanced on behalf of defendants 1 to 4 that the plaintiffs should have tendered or deposited the balance of sale consideration to show their readiness and willingness to perform their part of the contract has no force since it was categorically stated by DWI herself that the plaintiffs arc very rich people and it was never stated that the plaintiffs have no capacity to pay the balance of sale consideration. More over it is not mandatory in a suit for specific performance that the balance of sale consideration should be deposited in the Court or tendered to the defendants at the time of filing of the suit, but the same can be done when the Court directs to do so. It is well settled that it is not essential for (he plaintiffs to tender to the defendants or lo deposit in Court any amount except when so directed by the Court. In the case on hand the plaintiffs never called upon the defendants to deposit the balance of sale consideration into Court nor obtained any orders in that regard.
Therefore, in our view, non-tendering of balance sale consideration cannot be a ground to deny specific performance to the plaintiffs. Further the question of payment of balance of sale consideration could occur only after the defendants had secured clearance by producing required certificates from the Income tax authorities. Municipal Authorities and sales tax authorities as agreed in the agreement of sale, Ex.AI. Admittedly the defendants could not secure any of the above certificates. Therefore the admission made by DW1 on this aspect also clinehingly establishes that the defendants were never ready and willing to perform their part of the contract and to execute the sale deed in favour of the plaintiffs. It is also clear from the evidence that when the defendants had so many debts, which they failed to disclose, one cannot expect the plaintiffs to pay them the entire balance of sale consideration and invite troubles from the creditors of defendants 1 to 4. Despite all the troubles undergone by the plaintiffs to get the sale executed in their favour after paying the balance sale consideration they are always ready and willing to perform their part of the conn-act and therefore their willingness and readiness cannot be doubted as they have been moving from post to pillar and corresponding through their advocate so as to finalise the transaction and to take the registered sale deed from defendants 1 to 4. It is not as though they slept over the matter to kept quite for a long time within 3 to 4 months they could pay Rs.3,50,000/- apart from Rs.3 lakhs that was paid at the time of the suit agreement. They also expressed their readiness and willingness in all the letters to pay the balance of sale consideration provided defendants 1 to 4 could get clearance from their creditors.
57. The contention of the learned Counsel for the appellants that the grant of specific relief is a discretionary one and that an alternative decree is for damages instead of order specific performance can be granted cannot be accepted, It is to be noticed that the suit way filed on 20-4-1987 and the suit agreement is dated 17-1-1986 and originally the time stipulated was six months. Later it was extended by three months in Rx.A 15 notice but the subsequent behaviour of the defendants made it clear that they went on extending time so as to have discussions with the plaintiffs and settlement with their creditors. Therefore, it cannot be said that there is delay in this ease. In fact defendants never took a plea that there is the delay or that the delay caused them any prejudice.
58. The Supreme Court in the case of Lourdu Mari David and others v. Louis Chirmaya Arogiawamy and others, , while interpreting Section 20 of the Specific Relief Act, 1963 held as follows :
“Granting or refusing a decree for specific performance is in the discretion of the Court. But the discretion should not be refused arbitrarily. Discretion should be exercised on sound principles of law capable of correction by appellate Court.”
59. The Supreme Court in the said case further held :
‘”It is settled law that the part)’ who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands. In other words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief.”
60. Following the law laid down by the Supreme Court in the above decision it can be said that defendants 1 to 4 were never ready and willing to perform their part of the contract and therefore it can be inferred that they have not come to the Court with clean hands and thus they are not entitled to equitable reliefs. Ordinary rule is that specific performance should be
granted, but it ought to be denied only when equitable considerations point in its refusal and the circumstances show that damages would constitute an adequate relief. Here in this case there is no iota of evidence to show there are laches on the part of the plaintiffs. Defendants 1 to 4 themselves suppressed several of their debts and they could not secure the clearance certificates from Income tax, sales tax and Municipal authorities though they agreed to get them in the suit agreement. It is not as though the plaintiffs parted only a paltry sum. Within few months they could pay Rs.3,50,000/-apart from the original payment of Rs.3 lakhs totalling to Rs.6,50,000/-. Therefore, it can be said that they were diligent in performing that part of the contract. Hence we see absolutely no reason to discard the evidence put forth by the plaintiffs and therefore the relief of specific performance in favour of the plaintiffs cannot be denied. Therefore it can be held that the plaintiffs are entitled for specific performance of the suit agreement of sale, Ex.A1, dated 17-1-1986.
61. The claim in respect of plaint schedule property by defendants 5 to 10, appellants in AS No.939 of 1998, that they have purchased a portion of the said property during the pendency of the suit under Exs.Bl to B3 from defendants 1 to 4, the transaction is hit by the principle of lis pendens. To prove that defendants 5 to 10 are the bona fide purchasers none ofthem were examined to speak that they had no knowledge of Ex.Al, dated 17-1-1986 or the pendency of the suit. It is to be seen that as pointed out by the trial Court there is no pleading in the written statement that they had earlier executed an agreement of sale and in pursuance of the same they purchased a portion of the suit property.
62. Sri C. Poornaiah, learned senior Counsel appearing for defendants 5 to 10, appellants in AS No.939 of 1998, in support of his contention that defendants 5 to 10 are the bona fide purchasers for value without notice of the suit agreement, Ex.A1, dated 17-1-1986, placed reliance on a decision of the Supreme Court in Jagan Nath v. Jagdish Rai, . In that case the Supreme Court held as follows :
‘”In the light of the aforesaid oral evidence, therefore, the conclusion reached by the learned single Judge of the High Court that defendant No.2 through his guardian was a bona fide purchaser for value without notice of the suit agreement, stands wells established. The documentary as well as oral evidence leave no room for doubt that the aforesaid findings are well sustained on the record of the case and call for no interference in the present appeal.”
63. We see no force in the arguments advanced on behalf of defendants 5 to 10. The case relied upon by Sri C. Poornaiah, learned senior Counsel appearing for defendants 5 to 10 is of no helpful to the facts of the case on hand. There is no material available to support the case of defendants 5 to 10 to reach a conclusion that defendants 5 to 10 are the bona fide purchasers for value without notice to the suit agreement. In the case on hand it appears that none were examined on behalf of defendants 5 to 10 to prove that they are bona fide purchasers for value without notice of the suit agreement. More over to speak about the knowledge of Ex.A1, dated 17-1-1986, except the husband of the 5th defendant, who was examined as sole witness as DW1, nobody was figured as witness. Though no plea was taken in the written statement, DW1 has spoken to the effect that the mother of the 2nd defendant had earlier executed an agreement of sale and in pursuance of the same they purchased a portion of the suit property. Nobody
connected to such an alleged agreement was examined to support their case. In the absence of the relevant and unimpeachable evidence available on record, it cannot be said that defendants 5 to 10 are the bona fide purchasers for value without notice of the suit agreement, Ex.Al, dated 17-1-1986. Therefore the trial Court, very rightly in our opinion, rejected the plea of defendants 5 to 10 that they are subsequent bona fide purchasers for value without notice to the agreement of sale Ex.Al, dated 17-1-1986. Therefore we are not inclined to take a different view than that of the trial Court, which is based upon the entire evidence adduced by both the parties. The trial Court after careful scrutiny of the entire evidence decreed the suit filed by the plaintiff as prayed for. Therefore we do not see any perverse finding of fact recorded by the Court below warranting interference in the order under appeal.
64. At this stage when the Court made a suggestion to both the parties as to whether they are willing to compromise in the matter and get the dispute resolved Sri P. Gangaiah Naidu, learned Counsel for the plaintiffs, after ascertaining from his clients submitted that his clients are prepared to pay extra sum of Rs.10 lakhs or a little more reasonable amount excluding the sale consideration to defendants. The Court felt it reasonable with regard to the offer given by the plaintiffs, which excludes the sale consideration. But the defendants were not agreeable to the offer given by the plaintiffs. On the other hand the defendants in turn offered a sum of Rs.10 lakhs to the plaintiffs in addition to the amount already paid by the plaintiffs and received by the defendants.
65. For the foregoing reasons the appeals fails and are accordingly dismissed, but, in the circumstances, without costs.