ORDER
C.M. Nayar, J.
1. The present suit has been filed by the plaintiffs for specific performance of agreement to sell dated May 10, 1978 entered into between the defendant as the Vendor and the plaintiffs as Vendees in respect of the property known as plot No. G-47 Block No.6. Green Park, New Delhi.
2. The facts as enumerated in the plaint are that the defendant by means of an agreement dated May 10, 1978 agreed to make sale of the aforesaid plot to the plaintiff for total consideration of Rs. 1,70,000/- out of which a sum of Rs. 5,000/- was paid by means of cheque No. SB/031386 dated May 8, 1978 drawn on Punjab & Sind Bank, Sector 17-C, Chandigarh. The said payment was made as alleged earnest money and part sale consideration which was accepted by the defendant. The agreement to sell was entered into between the parties in writing and signed by plaintiff No. 1 for self and on behalf of his wife plaintiff No. 2 and the defendant appended the signatures on each page of the agreement. The defendant encashed the aforesaid chaque of Rs. 5,000/- and acknowledged having received the amount in consideration of the agreement to sell. In terms of the covenants contained in the agreement, defendant was to obtain the necessary permission from the Competent Authority and was to deliver actual and physical possession of
the property to the plaintiff at the time of registration of the sale deed and was to receive the balance consideration amount of Rs. 1,65,000/- before the Sub Registrar at the time of presentation of the Sale Deed for its admission of execution and egistration. The defendant assured plaintiffs that the plot in question was self acquired and free all encumbrances and there was no charge, lien etc, in respect of the same. The defendant
further undertook that she would obtain No Objection Certificate from the Competent Authority as envisaged in terms of the Urban Land (Ceiling & Regulations) Act, 1976 (hereinafter referred to as ‘the Act’) and she would obtain necessary income tax clearance from the authorities concerned and after having obtained the same she would intimate to the plaintiffs accordingly and would get the sale deed executed from the said date within a period of 30 days thereof. The relevant facts and pleadings are contained
in paragraphs 9,10,11,12 and 13 of the plaint which may be reproduced as follows:
“9. That the defendant as required made application for seeking
necessary permission from the competent Authority in accordance with the Urban Land (Ceiling and Regulations) Act, 1976. The application was made under the signatures of the parties. She came to Delhi as aforesaid, received a sum of Rs. 5,000/- on
15.5.1978 and on the same very day she made application after having duly filled the necessary forms for obtaining the necessary permission form the competent Authority. It was categorically stated in the said application for obtaining necessary permission that the property was to be sold to the plaintiffs and the signatures of the plaintiffs were also obtained, as required under law. It is pertinent to note that the original application was filled in the hands of the plaintiff No. 1 though it might not have been much relevant but it has its own significance since thereafter a fraud has been played and manipulation in the record has been made by the defendant who has also been summoned as an accused in the criminal proceedings and she is being prosecuted for the same in the circumstances as shall be referred to herein after. As required she also filed an affidavit along with the application dated 15.5.1978 stating therein that she did not own any other property except the plot in question.
10. That when the petition was submitted on 15.5.1978 for seeking permission under section 27(2) of the Act a receipt was issued from the office of the competent Authority to that effect and she
was directed to appear on 12.6.1978 at 11 A.M. with necessary documents in original. The plaintiffs rely on the said record. The plaintiffs have also obtained certified copy of the said receipt. Thereafter the plaintiffs have also obtained photo copy
of the said application u/s 27(2) of the Act after the same has been tempered within the circumstances stated below. The plaintiffs could obtain photo copy since thereafter, in the circumstances as shall be referred to hereinafter, the plaintiff came to know that she has played fraud and has made perjury in the record of the Competent Authority and manipulated dates and other writing in the original application with intention to have a refusal of grant of permission by playing fraud. The same came to light, as the plaintiff No.1 piled criminal complaint and he
summoned record in the court of shri S.M.Chopra, metropolitan Magistrate, New Delhi and when the record was brought the plaintiff No. 1 was stunt to find that per jury has been made in the said record and manipulation was made in the application and filed an affidavit of subsequent date as 15.1.1979 showing therein though falsely that she was holding other properties. These informations were false and were made only to have an order of refusal of permission. Plaintiff No. 1 sought permission of the court to have photo copy of the application as she also made manipulation in changing the date of application from 15.5.78 to 15.1.79 and other manipulations were made. She changed the date on the front page of the said application and also made other additions but as usual the forgery has left its traces, as on the back side of the said application, the date which was original written as 15.5.78 and the application was actually submitted
before the Competent Authority on the said date was not changed. It seems that in collusion with some officials of the said Department she tried to show that ubsequently she applied for permission and so changed the date etc. and new file was got made.
11. That as aforesaid originally the application was made on 15.5.78 for obtaining necessary permission and she was directed to appear before the Competent Authority on 12.6.1978 but it seems that during this period she became dishonest and never wanted to transfer the title of the plot. It looks that she has dishonest intention right from the beginning and wanted to cheat the plaintiff so she did not appear on the date fixed i.e. 12.6.78. She was being requested by the plaintiffs to take appropriate steps before the Competent Authority to obtain necessary permission to comply with her part of the obligations in terms of the agreement to sell as aforesaid. /P>
12. That suddenly the plaintiff received the letter dated 26.8.78 from the defendant while indicating therein the plaintiffs should treat the agreement to sell as revoked. On receipt of the said letter the plaintiff No.1 by means of registered A.D.letter dated 26.9.78 pointed out to her that her act was illegal. She was not competent to revoke the agreement to sell and otherwise the plaintiff was always ready and willing to perform their part of the contract in terms or the agreement to sell and even to the extent that he has made arrangement and got a sum of Rs. 2 lakhs from sufficient long time in his account for the payment of the balance sale consideration amount and to meet other necessary stamp, registration and miscellaneous expenses. He also pointed out to her that he has sustained loss because of keeping huge amount in the bank and because of her act of not following the matter and requested her to perform her part of the contract and to do the needful and to obtain the necessary permission, to execute the sale deed.
13. That thereafter the plaintiff has been approaching the defendant with the request to take appropriate steps and to execute the Sale Deed. It was transpired that she was avoiding to do so. The plaintiff No.1 while believing under bona fide impression as was told by her that the permission has not been granted by 1st week or March in 1979 and it was conveyed in the first week of March, 1979 to plaintiff No.1 Who believed the same to be correct (though later on it was found the same was wrong), an act of fraud was found, the plaintiff got served a legal notice dated 9.3.1979 on the defendant through the counsel. It was bona fide impression on the part of the plaintiff that she has been refused permission on the basis of the original application dated 15.5.78. It is at the cost of repetition sated that in the application as well as in the affidavit attached with the said application dated 15.5.78 she communicated that she has no other property so there was no legal bar or legal impediment in grant of permission to make sale of the said plot unto the plaintiffs. The plaintiff was under bonafide impression that the permission has been refused for valid reasoned to dependent though the plaintiff have all intentions to have the plot and not compensation and no amount of compensation in any manner would compensate the desire of the plaintiffs to have plot means of specific performance of the contract, though the plaintiff has no intention in any manner to give up their right and to enjoy right of specific performance but with invention to cause threatening and compel the defendant to specifically perform the contract, no doubt certain amount were asked for, but it was with intention to compel the defendant to take appropriate action for performing the contract. It is mentioned that the said notice through counsel was sent under bonafide belief to the aforesaid aspect specially that the permission was not granted on original application dated 15.5.1978 accompanied with affidavit of the same date filed with the said application dated 15.5.78 though the same was not correct position.
3. It is next alleged the plaintiff received a notice dated March 29, 1979 through counsel for the defendant whereby she came with the position for the first time that she was not going to execute the sale deed and this act of defendant had been alleged as tantamount to refusal to execute the Deed. The plaintiff pleaded that the defendants had played fraud on them as also on the competent Authority by managing and maneuvering the refusal of permission under the provisions of the Act and as a consequence the plaintiff filed a compliant under Section 420 of the Indian Penal Code against the defendant on the grounds that she had chanted the plaintiff. The complaint subsequently in the ultimate analysis was dismissed and the defendant was discharged by the Court of Shri O.P.Gogne, Metropolitan Magistrate Delhi vide his judgment dated August 30, 1984.
4. It is argued that since the defendant is not ready and willing to perform her part of the contract and refused to execute the Sale Deed by taking the plea of having been refused permission by the Authorities, the refusal cannot be considered to be refusal in law and the defendant is bound to make proper application disclosing true facts and obtain necessary orders for grant of permission and declaration. The cause of action for institution of the suit has accrued to the plaintiff on or about 4/5th April, 1979 when the intention of the defendant was made clear and she refused to execute the sale deed and also refused to perform her part of the contract by means of communication dated March 27, 1979 as pleaded in paragraph 25 of the plaint.
5. Defendant filed the written statement wherein in substance the following pleas have been taken:
(A) The sale of the urban property is subject to statutory obligation. In
the present case as per the agreement to sell the defendant was to take permission from the Competent Authority under the Act to execute the sale deed as the total property told by the defendant was more than the ceiling limit. As per the terms of the agreement to sell, the defendant applied to the competent Authority and the said Authority refused permission on the ground that the defendant held 7 other properties and plots and according to Section 4(9) of the Act, the
plot in question was in excess of the prescribed ceiling limit as envisaged under the Act. The said order passed by the Competent Authority is dated 5.2.1979 and on 5.2.1979 the defendant informed the plaintiff that the competent Authority has refused permission to sell the plot in question. The defendant also delivered cheque No.284351 of Rs. 5000/- in lieu of the earnest money received by the defendant from the plaintiff as per the terms of the agreement to sell. It is further stated that the agreement to sell was executed in the ignorance of law and is void ab initial being contrary to the provision of law and
therefore, cannot be enforced.
(B) The present suit for specific performance is not maintainable as the plaintiffs vide notice dated 9th march, 1979 through his counsel claimed damages and waived the specific performance of the contract. The relevant para of the notice reads as under :
“5. You are, therefore, required to take notice that you should
pay the above mentioned amounts to my clients within 15 days from the receipt hereof, failing which my salients shall file a suit for the recovery thereof and in which case you shall be liable for all costs and consequences.”
(C) The suit is time carried and the same may be dismissed on this short ground alone. It is submitted that on 23rd July, 1978 the defendant issued and delivered a cheque No. 284351 dated 20.7.78 for Rs.5000/- drawn on Punjab National Bank, Sector 19, Chandigarh to Smt Raj Sood, the plaintiff No.2, in lieu of the earnest money received by the defendant and the other cheque No.031387 dated 15.5.78 for Rs. 5000/- delivered by the plaintiff was also returned by defendant to plaintiff No.2. The defendant specifically informed the plaintiff vide his letter dated 26.8.78 that the agreement to sell stands revoked as per legal advice given to the defendant. The plaintiff No.1 received the said letter dated 26.8.1978 on 2.9.78. It is further submitted that
the defendant vide her letter dated 5.2.79 informed the plaintiffs that the permission has been denied by shri G.K.Dikshit the then competent authority, vide order dated 1.2.1979 and the same was duly received by the plaintiff No.1 on 10.2.79. The lapse of 3 years and is, therefore, barred by Article 54 of the Limitation Act, 1963.
(D) No cause of action wholly or in part, has arisen to the plaintiff in the territorial jurisdiction as the agreement to sell was executed at Chandigarh, and the defendant actually resided at Chandigarh. It is submitted that this court has no territorial jurisdiction to try this suit.
(E) The suit is bad on account of non-joinder of necessary party. It is submitted that the allegations have been made by the plaintiffs against the Competent Authority and, therefore, the Competent Authority is a necessary party and in the absence of the Authority the suit cannot be decided.
(F) The defendant entered into an agreement with the plaintiff for selling plot No. G-47, Block No.6, Green Park, New Delhi for a total consideration of Rs.1.70 lacs on 10th day of May, 1978. It may be mentioned that in the agreement to sell there was a clause which reads as under:
“And whereas the vendor undertakes to secure the necessary permission from the competent authority within a stipulated period and if for any reason beyond the control of the vendor, the vendor Smt. Vir Bala Sharma will be liable to refund the earnest money.”
It is stated that the defendant submitted on 15.1.79 a notice u/s
26(1) of the Act to the then Competent Authority and the said Authority vide his order dated 1.2.79 refused the permission. It is submitted that when the defendant came to know that permission cannot be granted, the defendant issued a cheque in favour of the plaintiff for Rs.5000/- vide cheque No. 284351 dated 20.7.78 drawn on Punjab National Bank, Sector 19, Chandigarh in-lieu of the earnest money as received.
(G) Plaintiff No. 1 assured the defendant that he will obtain the permission for the defendant and asked the defendant to give an affidavit declaring vacant land in Delhi to the effect that she has the only vacant plot in question in Delhi. The defendant on the advice of the plaintiff and his Advocate declared her only vacant land in Delhi in
the affidavit and gave the same to the plaintiffs. It is denied that any fraud whatsoever has been played by the defendant or she has manipulated any of the records. Plaintiff No.1 filed a complaint in the court of Metropolitan Magistrate (Hauz Khas) New Delhi on 17.9.79 and the same was dismissed by the learned Metropolitan Magistrate on
7.1.1981 against which revision before the sessions Court was filed and the learned Judge without notice to the defendant remanded the case back to the learned Magistrate’s court. The defendant was then summoned in the case and on the basis of the plaintiff’s own letters, the learned Metropolitan Magistrate, Shri O.P.Gogne had discharged the
defendant vide judgment dated 30.8.84. It is stated that these proceedings were initiated to harass the defendant and to compel her to illegally execute the sale deed.
6. Replication is filed by the plaintiff and the averments made in the plaint are reiterated. The parties went for trial on the following issues which were framed on May 19, 1986:
1. Whether the suit is barred by time?
2. Whether the suit is bad for non-joinder?
3. Whether the plaintiffs have been ready and willing to perform their part of the agreement?
4. Whether the defendant committed the breach of contract?
5. Whether the agreement to sell is enforceable in the absence of permission to sell by the Competent Authority under the Urban Land Coiling Act?
6. Whether the plaintiffs are entitled to specific performance of the agreement to sell in the facts and circumstances of the present case?
7. Whether the plaintiffs have waived the specific performance of the agreement?
8. Relief.
7. At this stage the terms of the Agreement to sell dated May 10, 1978 which have not been disputed by the parties may be reproduced as follows:
AGREEMENT TO SELL
This agreement to sell made this 10th day of May, 1978 between Smt. Vir Bala Sharma, w/o Shri Brahm Prakash Lakhanpal resident of House No.72, Sector 27/A, Chandigarh, hereinafter called the Vendor which expression shall unless repugnant to the context be deemed to mean and include the said Vendor, her heirs, successors, legal representatives, administrators, executors and assigns, the party of the First part; and Shri Ravi Sood son of shri Asa Nand and Smt. Raj Sood, D/o L. Krishan Chand & w/o Shri Ravi Sood, resident of 1/5 Sariva Priya Vihar, New Delhi-16, hereinafter called the Vendee, which expression unless repugnant to the context be deemed to mean and include his successors, legal representatives, administrators, executors and assigns, the party of the Second part.
WHEREAS the Vendor is seized and possessed of in her own rights as full and absolute owner and otherwise well and sufficiently entitled to own and in possession of plot No.47, Block No. G of land in Schedule ‘A’ mentioned situated in village Kharera, now known as Green Park on the main Mehrauli Road, New Delhi – in- tended hereby to be sold and transferred, boundaries whereof are detailed as under and which plot of land is free from all encumbrances including all sorts of lease, attachment, injunction, notices, mandatory prohibitory charges, demands, liabilities or any legal disputes whereof the vendor assures the vendee and that the vendor has an unrestricted right and power to convey and transfer her property vide title and interest therein;
AND WHEREAS the Vendor has agreed with the Vendee for the absolute sale of the said plot No.47, Block No. ‘G’, in Green Park measuring 200 hundred square yards for a consideration of Rs.1,70,000/- (Rs. one lac seventy thousand only).
AND WHEREAS the vendee has paid an amount of Rs.5,000/- (Rs. five thousand only) through Cheque No. SB 031386 dated the 8th of May, 1978 drawn on the Punjab and Sind Bank, Sector 17/C, Chandigarh in favour of the vendor Smt. Vir Bala Sharma aforesaid as earnest
money which will be adjusted and the balance of the consideration of Rs.1,65,000 (Rs. one lac sixty five thousand only) will be paid before the concerned Registrar New Delhi at the time of the registration of the sale deed;
AND WHEREAS the Vendor undertakes to secure the necessary permission from the Competent Authority within a stipulated period and if for any reason beyond the control of the Vendor, the Vendor Smt. Vir Bala Sharma will be lilable to refund the earnest money.
AND WHEREAS the vendor will be under an obligation to provide every type of facilities for the due execution of the sale deed and will also fulfilll the legal requirements, if need be.
AND WHEREAS the Vendor has hereby agreed to deliver the actual possession of the said plot to the Vendee at the time of registration of the sale deed;
AND WHEREAS the vendor hereby declares and assures the vendee that the said plot is self-acquired property and the same is free from all sorts of charges and encumbrances, liens, claims, demands, liabilities, injunction, legal flaws, disputes, sale, mortgage, gift etc.
AND WHEREAS the Vendor hereby will do all such acts, things and deeds as may be necessary to obtain “No Objection Certificate” from the Competent Authority in terms of the provisions of the Urban Ceiling Land Regulation Act, 1976. The vendor will also
obtain permission from the Income Tax Authorities. When the Vendor has obtained the necessary permission from the Competent Authorities, the Vendor will call upon the vendee to complete the sale before the Registrar, New Delhi within 30 days from the date of such call. In case of default by the vendee, it shall be at the option of the vendor to execute or not to execute the sale deed in favour of the vendee or his nominee.
AND WHEREAS the expenses of the stamp papers for the purposes of the sale deed will be borne by the Vendee and other ancillary expenses will be also borne by the vendee.
IN WITNESS WHEREOF, the parties have set their signature on the day, month and year mentioned above.
SCHEDULE ‘A’
Plot No.47, Block No. G
Village Kharera,
now known as Green Park
The issues framed in the suit may now be examined.
ISSUE NO. 1
8. The learned counsel for the defendant has contended that the defendant could not obtain permission under the provisions of the Act and, therefore sent a communication to the plaintiffs on February 5, 1979. The suit was filed on March 29, 1982 i.e. beyond the period of three years as provided under Article 54 of the Limitation Act and the same is, accordingly time barred.
9. It is not disputed that the limitation is governed by the provisions of Article 54 which prescribes a period of three years. This provision may be reproduced as follows:
54. For specific Three Years The date fixed for the
performance of a performance, or, if no such
contract. date is fixed, when the
plaintiff has notice that
performance is refused.
The notice dated March 29, 1979 was sent to the counsel for the plaintiffs to reiterate that the performance of the contract had become impossible by refusal of permission to sell the plot by the Competent Authority which was specifically refused by order dated February 1, 1979. Paragraphs 3, 4 and 5 of this communication which is Exhibit PW1/D-5 may be reproduced as follows:
“3. In reply to para 3 of your notice it is admitted that my
client applied for grant of permission to the Competent Authority but it is incorrect that she did not pursue the said application. Permission was specifically refused by the Competent Authority, Delhi vide the order dated 1.2.79, a true copy of which order is
attached herewith.
4. In reply to para 4 of your notice I state that my client has not failed to perform her part of the contract of sale but the performance has been made impossible by refusal of permission to sell by the Competent Authority under the Urban Land (Ceiling & Regulations) Act, 1976. My client is not liable to pay any damages as she has not refused to perform her part of the contract but the performance of the contract has become impossible in view of the non-grant of the permission to sell by the Competent
Authority. The damages claimed by you on behalf of your client are imaginary and my client is not responsible for payment of any damages at all to your clients.
5. In reply to para 5 of your notice I am instructed to state that as stated above my client is not liable to pay any damages at all to your clients and if your clients rush to the court of law and file a suit for recovery of any amount as damages the same shall be contested and in that event your clients shall be liable for the costs that my client may have to incur in defending any such suit.”
The above reply to the notice of the plaintiff will clearly indicate that the defendant took the plea that the performance of the contract had been made impossible by refusal of permission to sell by the Competent Authority. The plea of damages, as a consequence, was denied. The evidence of PW1 Ravi Sood also proves the above said communication and denies the letter dated February 5, 1979 purported to have been sent by the defendant though he specifically admits that the address given on AD Card was correct
but he denied the signatures on the same. It cannot be positively said that the defendant did not return the cheque though the actual refusal may be interpreted to be on the basis of the reply of notice dated March 29, 1979, as referred to above. The suit having been filed within three years from that date is held to be within time. The issue is decided in favour of the plaintiffs.
ISSUE NO. 2
10. This issue was not seriously contested by learned counsel for the parties which obviously will imply that the suit cannot be held bad for non-joinder of Competent Authority as the order passed by this Authority refusing to grant permission under the Act is not in dispute. The said Authority is, accordingly, not a necessary party and this issue is also decided in favour of the plaintiffs.
ISSUE NO. 3
11. The question now arises as to whether the plaintiffs have been ready and willing to perform their part of the agreement. The following facts may be considered:
(a) the execution of the Agreement is not denied;
(b) the parties signed an application on May 15, 1978 which was submitted before the Urban Land Ceiling Authority. It was alleged that a further amount of Rs.5,000/- was paid by cheque on May 15, 1978 which, however, was not encashed;
(c) Exhibit D-10 is the communication dated September 26, 1978 which reiterates that plaintiff No. 1 had kept a sum of Rs.2 lakhs in his Bank Account ready for payment for transfer of the plot.
The plaintiffs have also filed subsequent Bank statements which though did not relate to the relevant period would indicate that they were people of substance and could arrange for the payment of the balance amount at the time of conclusion of the contract. The defendant has not produced any evidence to enable the Court to hold otherwise. In view of the above facts it is held that the plaintiffs were ready and willing to perform then part of the contract. This issue is decided in favour of the plaintiffs.
ISSUE NO. 4,5,6 & 7
12. The question now arises as to whether the defendant committed breach of the contract and whether the Agreement to Sell could be enforced in the absence of permission to sell by the Competent Authority under the Act. The reading of the Agreement makes it clear that the necessary permission had to be obtained by the defendant before effecting transfer of the plot. The following clauses from the Agreement may be reproduced as follows:
“AND WHEREAS the Vendor undertakes to secure the necessary permission from the Competent Authority within a stipulated period and if for any reason beyond the control of the Vendor, the Vendor Smt. Vir Bala Sharma will be liable to refund the earnest money.
AND WHEREAS the Vendor hereby will do all such acts, things and deeds as may be necessary to obtain “No Objection Certificate” from the Competent Authority in terms of the provisions of the Urban Ceiling Land Regulation Act, 1976. The vendor will also
obtain permission from the Income Tax Authorities. When the Vendor has obtained the necessary permission from the Competent Authorities, the Vendor will call upon the vendee to complete the sale before the Registrar, New Delhi within 30 days from the date of such call. In case of default by the vendee, it shall be at the option of the vendor to execute or not to execute the sale deed in favour of the vendee of his nominee.”
The reading of the above provisions would clearly reiterate that the defendant was obliged to take necessary permission under law from the Competent Authority and was under obligation to do all acts to obtain ‘No Objection Certificate’ in this regard. It was further stipulated that if for any reason the permission was not granted the venders, plaintiffs herein were to receive the refund of their earnest money. The application in this case was first moved by the defendant on 15th May, 1978 which was
also signed by the plaintiffs as the prospective transferees which was dismissed in default on June 12, 1978. Subsequently, the date was changed on the first page of the application which was re-submitted by dating it to January 15, 1979. The same was rejected when the following order was passed by the Competent Authority, Delhi:
“OFFICE OF SHRI G.K.DISHIT: ADDL. DISTRICT MAGISTRATE (LA)/COMPETENT AUTHORITY UNDER SECTION 26 & 27 OF THE URBAN LAND (CEILING AND REGULATION) ACT: 1976.
ORDER
Smt. Vir Bala Sharma
w/o Shri B.P. Lakhanpal
resident of Sector 27-A,
House No.72, Chandigarh
submitted on 15.1.1979 a notice u/s 26(1) of the Urban Land (Ceiling and Regulation) Act, 1976 intending to sell the vacant land described below:
DESCRIPTION OF VACANT LAND
G-47, Green Park, New Delhi
(Area : 200 S.Yds.)
2. Plot in question is proposed to be sold by the applicant in favour of Shri Ravi Sood and Mrs. Raj Sood for a sum of Rs.1,70,000/-.
3. From the affidavit filed by the applicant, it is revealed that apart from plot in question, the applicant holds 7 other properties, the applicant holds 7 other properties and plots and according to section 4(9) of the Act, the plot in question is in excess of the prescribed ceiling limit as envisaged under the
Urban Land (Ceiling & Regulation) Act, 1976.
Since the applicant holds excess vacant land, she cannot sell the plot in question unless she files a return u/s 6(1) of the Urban
land (Celling & Regulation) Act, 1976 and the plot in question is exempted to her by the State Government.
SD/-
(G.K. DIKSHIT)
COMPETENT AUTHORITY; DELHI
DT.1.2.1979″
13. The defendant had earlier filed her return before the Competent Authority, Ludhiana on September 30, 1976 under the relevant provisions of law which was disposed of only on March 20, 1985. This is filed as Exhibit D-17. Therefore, the defendant could not obtain the permission under the Act and was not able to transfer the plot in favour of the plaintiffs. She informed them immediately or soon thereafter on such refusal and lastly in reply to the notice dated March 29, 1979. The plaintiffs continued to
persist in the matter but took no steps to file an appeal or to request the defendant to file an appeal against the Order passed by the Competent Authority. All these facts are not denied and even the statement of plaintiff No. 1 as PW1 categorically will indicate that the defendant took adequate steps to get the permission and did not at any stage mislead the plaintiff in this regard. The following portions from cross-examination of
this witness may be reproduced as follows:
“Before the agreement to sell was executed, negotiations took
place between me and the husband of the defendant. We had also exchanged correspondence between us. At the time of negotiations the husband of the defendant had told me that the defendant was possessed of a property at Ludhiana but he had not told me about
the other properties. We had discussed at the time of negotiating the deal that there could be a difficulty in getting permission from the competent authority. In so far as the other properties are concerned I was told about them after the execution of the
agreement to sell. it was wrong to suggest that I was told about the other properties at the time of negotiations and before the agreement to sell was executed. I had not consulted any lawyer in this regard to the matter of grant of permission by the competent
authority. It was correct that in my letter dated February 8, 1978 (Ext. D/1) I had stated that the deal could not be closed on account of technical hitch in respect of urban ceiling. I have seen letter dated April 13, 1978 Ext. D/2. It is correct that I had stated in that letter that I had got in touch with some one who would follow up the matter and see that the permission is granted. At this stage I do not remember who was the contact about which I was referring to in the letter. After looking at my letter dated April 29, 1980 Ext.D/3 I recollect that I had got in touch with Mr. Rajender Prakash, Advocate, for securing the permission at Delhi from the competent authority on behalf of the defendant. The opinion given by Shri Rajender Prakash, Advocate, was sent to the husband of the defendant. Ext.D/15 is the copy of the opinion given by Shri Rajender Prakash, Advocate. Various columns of the first application which was on the requisite form were filled up by me and not by Mr. Rajender Prakash, Advocate. By that time he had gone out of the picture. Ext.PW 1/D3 is not the form which was filed by me. However, the application was submitted in the form similar to Ext. PW 1/D3. Columns of this
form and the form filled up by me are more or less the same. I did not ask the defendant for a copy of the application submitted to the competent authority. I was pursuing the matter relating to the permission before the competent authority. After filing the
application before the competent authority on May 15, 1978, I wrote to the defendant on May 17, 1978 vide Ext.D/5. I had mentioned in that letter that the application under section 26 of the Urban Land Ceiling Act should also be filed. I was made aware by the office of the competent authority that the first application was not valid and no permission would be granted by the competent authority. The contents of Ext. D-6 dated May 20, 1978 are correct and I am not disputing the same. It is correct that I had by my letter dated May 26, 1978, (Ext.D/7) informed the defendant that I would withdraw the first application as the same
was incomplete and there was no point in getting the same dismissed. If the defendant had appeared before the competent authority on June 12, 1978, we would have filed a second application in the prescribed form. I think I had gone to the office of
the competent authority on June 12, 1978. I, however, did not appear before the competent authority dismissing the application was not passed in my presence. On telephone I had told the defendant that she should be present before the competent authority on June 12, 1978 so that another application could be filed and I would also be present at that time. However, I have not written any letter to the defendant in this regard. I do not remember as to whether two sets of applications – one under section 26 and the other under section 27 of the Urban Land Ceiling Act were prepared on May 15, 1978.
Earlier to the admission/denial of documents I had not seen Ext. PW1/D2. I am not aware that in the application under section 27 one is required to give the details of all the properties, whether located in Delhi or elsewhere. Affidavit Ext. PW1/D1 accompanying the application Ext. PW1/D2 was not in my knowledge. The defendant or her husband never came to my house after the permission was refused by the competent authority. It is incorrect to suggest that my wife was told that the permission had not been granted and that the cheque of Rs.5,000/- issued by me was returned as uncashed and another cheque of Rs.5,000/- was issued by the defendant towards refund of earnest money.
It is incorrect that on July 23, 1978 the defendant came to my house and handed over cheque No. 284351 dated 20.7.1978 which was for a sum of Rs.5000/- and the other cheque No.031387 dated 15.5.1978 in the sum of Rs.5000/- to my wife. I never had a talk with my wife about the return of the aforesaid cheques and about the visit of the defendant. After receipt of the letter of the defendant dated 26th August, 1978 Ex.D-8, I may have talked to my wife about the aforesaid cheques and the visit of the defendant to our house. I do not remember whether my wife told me that the aforesaid cheques were handed over to her. Ex. D-10 is my reply to Ex.D8. In this letter, I have not denied the fact that the aforesaid cheques have not been received by my wife. It is correct that in notice Ex.D-12 I have claimed only damages and not specific performance of the contract. After the dismissal of the first application, I asked the defendant to file an application under section 26 of the Urban Land
Ceiling Act. It was my understanding with the defendant that nothing would be concealed from the Competent Authority. It is correct that I received a copy of the order of the Competent Authority declining permission alongwith Ex.PW1/D-5. I have seen letter dated February 5, 1979 purported to have been written by the defendant to me. I deny the receipt of the said letter. The letter is marked ‘A’. A.D. card mark ‘B’ does not bear my signatures. However, my address given on the A.D. card is correct. After I came to know about the dismissal of the application, I did not ask the defendant to appeal against the order of the Competent Authority. I also did not challenge the order of the Competent Authority. I have seen Ex.D-12 dated 9th March, 1979. Before 9th March, 1979 there was an amount of Rs.2 lakhs in my account which I was maintaining with Punjab & Sind Bank, Kailash Colony, New Delhi. I have not filed the statement of account of Punjab & Sind Bank pertaining to the period before & upto 9th March, 1979. I am not sure whether I have got pass book pertaining to this account. This account may be alive but I have not operated it for the last several years. I have not made any attempt to obtain a copy of the statement of account relating to the aforesaid bank upto 9th March, 1979. It is wrong to suggest that on the aforesaid date and prior to it, I did not have a sum of Rs.2 lakhs in the said account in the aforesaid Bank. In fact, I had several lakhs of rupees in my account in the aforesaid Bank. After the reply of the notice by the defendant, I did not have any talk or correspondence with her. I had filed a criminal complaint against the defendant on the ground that there was tampering in the second application which was filed before the Competent Authority. I had moved the criminal Court, as the date on the application was tampered with. I do not remember whether I had made an allegation before the criminal Court about the change of the name in the application against Column No.7 thereof. Column No. 7 should have contained my name and my wife’s name of the defendant. After receipt of, the reply to the notice, I did not have any correspondence with the defendant but through common friends all the time I was approaching the defendant to complete the deal. I do not remember the dates when the common friends approached the defendant. I also do not remember whether such efforts were made during the course of the criminal case. I had approached the defendant through Mr. Yashpal Chadha who is a common friend of both the parties. It is wrong to suggest that I had instituted the suit as a matter of gamble. It is incorrect that I did not have the requisite amount up to 9th March, 1979 to purchase the property.”
14. Though the receipt of the letter dated February 5, 1979 is denied by this witness, the agreement was terminated by the defendant on notice to plaintiff No.1 in her reply dated March 29, 1979. The defendant was dragged
to the criminal court on the charges framed under Sections 406/420IPC and
had to suffer unnecessary hardship and harassment till she was ultimately
discharged by the court of the Metropolitan Magistrate, New Delhi on August 30, 1984. The operative part of this order may be reproduced as follows:
“It may be noted here that the agreement to sell was between the accused on the one hand and the complainant and his wife Smt. Raj Sood on the other hand. Complainant referred to the letter dated 26.8.78 of the accused wrote to her that he studied the agreement to sell and there was no provision for the accused to back out from there. He further added that he had made an advance of Rs. 5000/- which has been with the accused for several months.
Again another letter was written by the accused to the complainant and his wife on 5.2.79 informing that the sanction for sale of plot of land has not been granted by the competent authority and as such complainant may get the cheque dated 20.7.78 for Rs. 5000/- delivered to his wife revalidated for encashment. Complainant in his cross-examination had submitted that he may not have disputed the receipt of two cheques referred to in the letter mark-X dated 26.8.78. However, he denied the receipt of the letter dt. 5.2.79. In any case complainant has not categorically denied the receipt of the two cheques issued by the accused to him and handed over to his wife because the letter dated 26.8.78 has been acknowledged by him when he wrote a letter Ex. P.11. Now the moving of the application dated 15.1.79 by the accused was again an attempt to seek the permission from the competent authority for the sale of plot of land but that was rejected by the competent authority on the ground that she possessed 7 other properties and plots and, therefore, the plot in question is in excess of the prescribed ceiling limit. Copy of the order mark PE is on record. The contention of the complainant that the application has been rejected on the ground of her having other properties and his deriving the dishonest intention on the part of the accused does not seek to have any force. Accused was bound to detail the other properties held by her while making an application to the competent authority. If it is rejected, there is no fault on her part. Further her intention appears to be bonafide when she handed over two cheques to the wife of the complainant as mentioned in her letter dated 26.8.78.
As I have already observed above, there is no evidence of any forgery against the accused in respect of the over writings in the application Ex. CA. This court is not to go in that aspect.
In view of the above discussion, after perusing the evidence, I do not find any ground for framing charge against the accused. Accordingly accused is discharged.”
15. The learned counsel for the plaintiff has contended that it was mandatory on the part of the defendant to obtain necessary permission under the provisions of the Act and since time was not the essence of the contract, the conditional decree can be passed on the facts and circumstances of the case as admittedly, the refusal of permission by the Competent Authority was only a conditional one. He has cited the Judgment of the Supreme Court as reported in Mrs. Chandnee Widya Vati Madden Vs. Dr. C.L.Katial and
others may be referred to as under:
4. The main ground of attack on this appeal is that the contract is not enforceable being of a contingent nature and the contingency not having been fulfillled. In our opinion, there is no substance in this contention. So far as the parties to the contract are concerned, they had agreed to bind themselves by the terms of the document executed between them. Under that document it was for the defendant-vendor to make the necessary application for the permission to the Chief Commissioner. She had as a matter of fact made such an application but for reasons of her own decided to withdraw the same. On the findings that the plaintiffs have always been ready and willing to perform their part of the contract and that it was the defendant who willfully refused to perform her part of the contract, and that time was not of the essence of the contract the Court has got to enforce the terms of the contract and to enjoin upon the defendant-appellant to make the necessary application to the Chief Commissioner. It will be for the Chief Commissioner to decide whether or not to grant the necessary sanction.
5. In this view of the matter, the High Court was entirely correct in decreeing the suit for specific performance of the contract. the High Court should have further directed the defendant to make the necessary application for permission to the chief Commissioner, which was implied in the contract between the parties. As the defendant-vendor, without any sufficient reasons, withdrew the application already made to the Chief Commissioner, the decree to be prepared by this Court will add the clause that the defendant, within one month from today, shall make the necessary application to the Chief Commissioner or to such other competent authority as may have been empowered to grant the necessary sanction to transfers like the one in question, and further that within one month of the receipt of that sanction she shall convey to the plaintiffs the property in suit. In the event of the sanction being refused, the plaintiffs shall be entitled to the damages as decreed by the High court. the appellant sought to raise certain other pleas which had not been raised in the High Court; for example, that this was not a fit case in which specific performance of contract should be enforced by the Court. this plea was not specifically raised in the High Court and the necessary facts were not pleaded in the pleadings. It is manifest that this Court should not allow such a plea to be raised her for the first time.”
16. Reference is next made to the judgement as reported is Ramesh Chandra
Chandiok and another Vs. Chuni Lal Sabharwal (Dead) by his legal representatives and others which also lays down that readiness and willingness has to be construed and determined from the entirety of facts and circumstances relevant to the intention and conduct of the parties concerned and a decree for specific performance can be granted taking into consideration the facts and circumstances of each case.
Paragraphs 6 and 7 of this judgement read as follows:
6. We are unable to concur with the reasoning or the conclusions of the High Court on the above main points. It is significant that the lease deed was not executed in favour of the respondents by the Government until May 21, 1956. So long as their own title was incomplete there was no question of the sale being completed. It is also undisputed that according to the conditions of the lease the respondents were bound to obtain the sanction of the Rehabilitation Ministry before transferring the plot to anyone else. The respondents were fully aware and conscious of this situation much earlier and that is the reason why on 11-8-1995 it was agreed while extending the period for execution of the sale deed that the same shall be got executed after receipt of the sanction. The statement contained in Exhibit P-7 that that the execution of the sale deed “by us cannot be completed without the said sanction” was unqualified and unequivocal. The respondents further undertook to inform the appellants as soon as sanction was received and thereafter the sale deed had to be executed within a week and got registered on payment of the balance amount of consideration. We are wholly unable to understand how in the presence of Exhibit P7 it was possible to hold that the appellants were bound to get the sale completed even before any information was received from the respondents about the sanction having been obtained. It is quite obvious from the letter Exhibit P-8 dated June 15, 1956 that the respondents were having second thoughts and wanted to wriggle out of the agreement because presumably they wanted to transfer it for better consideration to some one else or to transfer it in favour of their own relation as is stated to have been done later. The respondents never applied for any sanction after August 11, 1955 and took up the position that they were not prepared to wait indefinitely in the matter and were therefore can celling the agreement “for want of certainty.” We are completely at a loss to understand this attitude nor has any light been thrown on the uncertainty contemplated in the aforesaid letter. It does not appear that there would have been any difficulty in obtaining the sanction if the respondents had made any attempt to obtain it. This is obvious from the fact that when they actually applied for sanction on November 11, 1956 it was granted after almost a week. The statement contained in Exhibit P-10 dated July 4, 1956 that the sanction was not forth coming has not been substantiated by any cogent evidence as no document was placed on the record to show that any attempt was made to obtain sanction prior to November 11, 1956. Be that as it may the respondents could not call upon the appellants to complete the sale and pay the balance money until the undertaking given in Exhibit P-7 dated August 11, 1955 had been fulfillled by them. the sanction was given in November 1956 and even then the respondents did not inform the appellants about it so as to enable them to perform their part of the agreement of sale. There was no question of time having ever been made the essence of the contract by the letters sent by the respondents nor could it be said that the appellants had failed to perform their part of the agreement within a reasonable time.”
7. On behalf of the respondents it has been urged that in spite of the letters of the respondent by which the agreement has been cancelled the appellants did not treat the agreement of sale as having come to an end and kept it alive. They were therefore bound to send a draft of the conveyance and call upon the respondents to execute the sale deed and get it registered on payment of the balance of the sale price as soon as they came to know directly from the Housing and Rent Officer that sanction had been granted. This they failed to do and it must be inferred that they were not ready and willing to perform their part of the agreement. Our attention has been invited to a statement in Halsbury’s Laws of England Col.34. Third Edn. at page that in the absence of agreement to the contrary it is the purchaser who has to prepare the draft conveyance and submit it to the vendor for approval. No such point was raised at any prior stage and in any case we do not consider that after the cancellation of the agreement by the respondents it was necessary or incumbent on the appellants to send any draft conveyance. The very fact that they promptly filed the suit shows their keenness and readiness in the matter of acquiring the plot by purchase. It must be remembered that the appellants had not only put in an advertisement in newspapers about the existence of the agreement but had also sent a letter Exhibit P-13 on September 12, 1956 declaring their readiness and willingness to pay the balance of the purchase price on the respondents procuring the sanction. The appellants further made enquiries directly from the authorities concerned about the sanction. Readiness and willingness cannot be treated as a strait-jacket formula. These have to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned. In our judgment there was nothing to indicate that the appellants at any stage were not ready and willing to perform their part of the contract. The High Court had taken another aspect of readiness and willingness into consideration, namely, the possession of sufficient funds by the appellants at the materials time for payment of the balance of the sale price. Romesh Chand P.W.6 had stated that his father was a Head Master since 1922 in a High School and he was also doing import business. He gave up service in 1934. The son joined-the father in his business in the year 1928 and his other brother appellants No.2 also joined that business some years ago. The bank account was produced which showed that between July 18, 1955, and December 31, 1955 the appellants’ father had in his account a credit of over Rs.15,000/- but thereafter between January 1956 and March 1956 an amount of Rupees 16,000/- odd had been withdrawn. According to the High Court after these dates there was nothing to show that the appellants had any funds. The evidence of Ramesh Chand P.W.6 that the family had an amount of Rs.40,000/- lying at their house was not believed. Now in the first place the relevant period for determining whether the appellants were in a position to pay the balance of the sale price was after November 1956 when sanction had been obtained by the respondents for transfer of the plot from the Rehabilitation Ministry. The appellants had admittedly paid without any difficulty Rs.7,500/- as earnest money and the bank account of the father showed various credit and debit entries from time to time. On March 5, 1956 an amount of Rs.12,720/- had been withdrawn by a cheque in favour of Romesh Chand P.W.6. According to his statement this amount was withdrawn because his father was very ill and it was decided to withdraw the amount at that time. It was deposited with his mother and remained with her throughout. There is no material or evidence to show that this amount had been expended or spent and that the statement of Romesh Chand was false on the point. Even if the version false on the point. Even if the version that Rs.40,000/- in cash were lying at the house of the appellant is discarded at least an amount of Rs.12,720/- must have been available at the material and relevant time. The appellants were carrying on business and there is nothing to indicate that they were not in a position to arrange for the remaining sum to make up the total of Rs.15,000/-. We are, therefore, unable to accept that the appellants, who had all along been trying their utmost to purchase the plot, did not have the necessary funds or could not arrange for them when the sale deed had to be executed and registered after the sanction had been obtained.”
17. The judgment of the Full Bench of Gujarat High Court as reported in Shah Jitendra Nanalal, Ahmedabad Vs. Patel Lallubhai Ishverbhai, Ahmedabad and others is cited to reiterate that it is always open for the court to pass conditional decree for specific performance subject to exemption being granted by the Urban Land Ceiling Authority. Paragraph 13 of this judgment may be reproduced as follows:
“In this view, in answer to the second question referred to us we hold that a conditional decree for specific performance subject to exemption being obtained under Section 20 of the Urban Land
(Ceiling and Regulation) Act, 1976 (Act No.33 of 1976) is permissible. As we have said earlier, we do not propose to answer the first question as it may not be necessary. The case will be sent back to the Division Bench for disposal in accordance with the decision herein and in accordance with law.”
18. The learned counsel for the defendant has argued that the plaintiffs had waived their right to enforce specific performance as will be evident from the communication dated March 9, 1979 (Exhibit D-12) wherein they claimed damages for the amount of Rs.40,670/- only whereas the learned counsel for the plaintiff has contended that waiver cannot be construed from legal notice and the plaintiff are entitled to specific performance. Reference is made to the judgments as reported as Dawsons Bank Ltd. Vs.
Nippon Menkwa Kabushihi Kaish (Japan Cotton Trading Co. Ltd) and Mademsetty Satyanarayana Vs. G.Yelloji Rao and others of the later judgment may be reproduced as below:
“(6). At the outset we shall construe the relevant sections of
the Specific Relief Act and the Limitation Act unhampered by judicial decisions.
Specific Relief Act: Section 22. – The jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so: but the discretion of the Court is not arbitrary but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal.
The following are cases in which the Court may properly exercise a discretion not to decree specific performance:-
“I. Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff’s part.
Illustrations
II. Where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff.
Illustrations
The following in a case in which the Court may properly exercise a discretion to decree specific performance:-
III. Where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
Illustrations
The First Schedule to the Limitation Act
Description Period Time from
of suit of which period
limitation begins to run
Art.113.For Three The date fixed
specific years for the performance,
performance or, if no such date is
of a contract fixed, when the plaintiff
has notice that
performance is refused."
time, we do so. Learned counsel for the plaintiff says that when
the parties.
the scope of the discretion, after excluding the cases mentioned in S.22 of the Specific Relief Act, be confined to waiver, abandoment of 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 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 appear.”
19. The above passage clearly states that cases in which the Court may exercise discretion not to grant decree for specific performance. Similarly, in the judgment as reported in Kanshi Ram Vs. Om Prakash Jawal and others , the Court clearly hold that the discretion should be exercised in accordance with justice, equity, good conscience and fairness to both the parties. Paragraph 5 of this judgment reads as under:
“Having regard to the facts of this case and the arguments addressed by the learned counsel, the question that arises for consideration is; whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable properly is not automatic. It is one of discretion to be exercised on sound principles. When the court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant.”
20. Similarly, the Supreme Court in N.P.Thirugnanam (D) by L.Rs., Vs. Dr. R.Jagan Mohan Rao and others highlighted the proposition that specific performance is an suitable remedy. Paragraph 5 of this judgment may be reproduced as follows:
“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 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 the 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 in material and relevant and is required to be considered by the court while granting or refusing to grant the relief of 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 circusmtances. 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.”
21. In the present case the facts and evidence would establish that the specific performance was conditional on the grant of permission under the provisions of the Urban Land (Ceiling & Regulations) Act. The defendant, as has been stated in the earlier part of this judgment, clearly applied for such permission and the application was duly signed not by the defendant but also by the plaintiffs. The permission was declined and the plaintiffs did not pursue the matter further for initiating filing of appeal and taking steps for grant of such permission. They knocked the door of the Criminal Court by filing complaint case against the defendant and that matter dragged for number of years though the remedy available to the plaintiffs was of civil nature and no criminal proceedings could have been initiated in the facts and circumstances of the present case. The defendant did not loose time and was soon as the permission by the Competent Authority was declined wrote to plaintiff No.1 that she was not able to go ahead with the agreement and allegedly returned even the earnest money of Rs.5,000/-. The plaintiff took no steps in the matter and approached this Court only in the year 1982 by means of filing and present suit. It is well settled that when sale is contingent on the Authorities granting sanction and permission, the contract cannot be enforced when there is no sanction. The Supreme Court in K.S.Vidyanadam Vs. Vairavan 1997 II AD S.C.368 had held that even where time is not the essence of the contract, the plaintiffs must perform their part of the contract within a reasonable time and reasonable time should be determined looking at all the surrounding circumstances including the express terms of the contract and nature of the property. Paragraphs 11, 12, 13 and 14 of this judgment may be reproduced as follows:
“11. Sri Sivasubramanium cited the decision of the Madras High
Court in S.V.Sankaraninga Nadar Vs. P.T.S.Ratnaswamy Nadar holding that mere rise in prices is no ground
for denying the specific performance. With great respect, we are unable to agree if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the court by law. We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties-fuelled by larger-scale migration of people from rural areas to urban centres and by inflation. Take this very case. The plaintiff had agreed to pay the balance consideration, purchase the stamp papers and ask for the execution of sale deed and delivery of possession within six months. He did nothing of the sort. The agreement expressly provides that if the plaintiff fails in performing his part of the contract, the defendants are entitled to forfeit the earnest money of Rs.5,000/- and that if the defendants fail to perform their part of the contract, they are liable to pay double the said amount. Except paying the small amount of Rs.5,000/- as against the total consideration of Rs.60,000/- the plaintiff did nothing until he issued the suit notice 2 1/2 years after the agreement. Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties evolved in times when prices and values were stable and inflation was unknown-requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so. Learned counsel for the plaintiff says that when the parties entered into the contract, they knew that prices are rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstances but they have also specified six months as the period within which the transaction should be completed. The said time limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, well stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent? All this only means that while exercising its discretion, the court should also bear in mind that when the parties prescribe certain time-limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract relating to immovable properties.
12. Sri Sivasubramanium relied upon the decision of this Court in Satyanarayana Vs. Yellogi Rao wherein it has been held:
“As Article 113 of the Limitation Act prescribes a period of 3 years from the date fixed thereunder for specific performance of a contract, it follows that mere delay without more extending up to 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 subsisting right or there will be a bar against the assertion. So, there must be some discretionary field unoccupied by the, three cases, otherwise the substantive section becomes otiose. It is really difficult be define that field Diverse situation 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 reasonably guided by judicial principles and capably of correction by a court of appeal.”
Subha Rao, J. speaking for the Bench, pointed out the distinction between Indian Law and the English Law on the subject and stated the conclusion in the following words; “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…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 defendants to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give such a relief.”
13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 years in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices – according to the defendants, three times between the date of agreement and the date of suit notice. The delay has brought about a situation more it would be inequitable to give the relief of specific performance be the plaintiff.
14. Sri Sivasubramanium then relied upon the decision in Dr.Jiwan Lal & Ors. Vs. Brij Mohan Mehra & Anr. 1979(2) S.C.R.2301 to show that the delay of two years is not a ground to deny specific performance. But a perusal of the judgment shows that there were good reasons for the plaintiff to wait in that case because of the pendency of an appeal against the order of requisition of the suit property. We may reiterate that the true principle is the one stated by the Constitution Bench in Chand Rani. Even where time is not of the essence of the contract, the plaintiff must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the sur- rounding circumstances including the express terms of the con- tract and the nature of the property.”
22. The facts of the present case would clearly show that the defendant applied for permission under the provisions of the Act and this application was signed by plaintiff No.1 as well. Therefore, it is established that all requisite steps were taken by the defendant and the plaintiffs even did not pursue the remedy to file the appeal against the order of the Competent Authority and merely resorted by criminal proceedings which were not permissible in law. There was no delay in informing the plaintiffs that the
agreement to sell could not be given effect to and the defendant informed the plaintiffs that the same stood revoked and refunded the amount of Rs.5,000/- by means of cheque which was, however, not encashed by the plaintiffs. The time period which elapsed between the execution of the agreement and revocation of the same by the defendant is not that much as to cause any mala fide aspersions to the conduct of the defendant. The circumstances will not, therefore, call for an order of specific perform-
ance in favour of the plaintiffs and they are not entitled to any relief in this suit. Issues 4, 5, 6 and 7 are decided accordingly.
23. In view of the above, the present suit is dismissed. The parties shall bear their own costs.