1 ® IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE10H DAY OF SEPTEMBER, 2015 BEFORE: THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY REGULAR FIRST APPEAL No.150 OF2010(SP) BETWEEN: Mr. Arjun M. Menda, S/o. Madandas, Aged 76 years, Presently at St. Joseph’s Building Complex, 28, M.G. Road, Bangalore-560 001. Represented by Shri Gopal L Raheja, GPA Holder. (By Shri G. Krishna Murthy, Senior Advocate for Shri A. Murali, Advocate) AND:
1. Smt. Narasamma, W/o. late Subbaiah, Presently at No.5 (New No.9), Cunningham Crescent Road, Bangalore-560 052.
2. Shri Venkatanarayana, S/o. late Subbaiah, … APPELLANT2Presently at No.5 (New No.9), Cunningham Crescent Road, Bangalore-560 052.
3. Shri Cowasjee Nesserwanji Dinshaw, Trustee of Sir Hormusji Cowasjee Dinshaw Trust, Residing at “Adenwalla Bagh”, Tardeo, Mumbai-400 007.
4. Mrs. Mukki Rutton Patel, One of the Trustees of Sir Hormusji, Cowasjee Dinshaw Trust, Residing at “Adenwalla Bagh”, Tardeo, Mumbail-400 007.
5. Mr. Y. Subbaraju, S/o. late Muniswamy Raju, Since deceased and represented By his legal representatives namely Respondents 6, 7, 8 & 9.
6. Smt. Chandramma, W/o. late Y. Subbaraju, Residing at No.20, I Floor, 8th B Main Road, R.M.V. Extension, Bangalore-560 080.
7. Shri Mohan Raju, S/o. late Y. Subbaraju, Residing at No.20, I Floor, 8th B Main Road, R.M.V. Extension, Bangalore-560 080. 3 8. Shri Srinivasa Raju, S/o. late Y. Subbaraju, Residing at No.20, I Floor, 8th B Main Road, R.M.V. Extension, Bangalore-560 080.
9. Shri Jagadeesh Raju, S/o. late Y. Subbaraju, Residing at No.20, I Floor, 8th B Main Road, R.M.V. Extension, Bangalore-560 080. (By Shri B.V. Acharya, Senior Advocate for M/s. Sreepada Associates, Advocates for Respondents 1 & 2, Shri Abhinav . R. for M/s. Kumar & Kumar, Advocate for Respondent No.9, Respondents 3 and 4 served, Service of notice to Respondents 6 to 8 held sufficient vide order dated 21.06.2010.) …RESPONDENTS ***** This Regular First Appeal filed under Section 96 read with Order XLI Rule 1 of the Code of Civil Procedure, 1908, against the judgment and decree dated 10.09.2009 passed in O.S.No.10234/1983 on the file of the XXVI Additional City Civil Judge, Mayo Hall, Bangalore (CCH No.20), decreeing the suit against Defendant No.1 and 2 for specific performance of contract and dismissing the suit against Respondents 3, 4 and 6. This Regular First Appeal having been heard and reserved at the Principal Bench Bangalore on 30/07/2015 and coming on for pronouncement of Judgment at the 4 Dharwad Bench, Dharwad, this day, the Court delivered the following:-
This is a plaintiff's appeal. The plaintiff is said to be a businessman and the partner in a firm, M/s K.Raheja Development Corporation - dealing in real estate. The first and second defendants were said to be in occupation of land measuring 1,28,000 square feet at No.9 (Old no.5), Cunningham Road, Bangalore. (Hereinafter referred to as the 'property', for brevity) The third and fourth defendants were said to be the trustees of a private trust, Sir Hormusji Cowasjee Dinshaw Trust (hereinafter referred to as the ‘Trust’, for brevity ). They claimed to be the owners of the said property. The fifth defendant is said to be a power of attorney holder for the first and second defendants.
2. It was claimed by the plaintiff that there were negotiations between the plaintiff and the first and second 5 defendants and defendant no.5 acting as their power of attorney holder, for the lease of the said property. This was said to be on the basis of the claim of defendant nos.1 & 2 claiming to have perfected their title to the property. It was said to have been revealed that defendants no.3 & 4 were, on the other hand, claiming that the property was the Trust property, and that there was litigation pending in this regard.
3. By a letter dated 4.11.1980, defendant nos.1 & 2 are said to have informed the plaintiff that they agree to lease the said property, in their capacity as absolute owners of the same. An advance payment of Rs.1.01 lakh was acknowledged. The plaintiff was required to pay a further sum of Rs.2 lakh, on the Trustees aforesaid, giving their consent for the transaction. The plaintiff was to pay a rent of Rs.16,700, per month for an area measuring 1.28 lakh sq. ft. of the said property. The lease was to be for a period of 98 years, with an option to renew the lease on the same terms and conditions, for a like term. Vacant possession was to be handed over to the 6 plaintiff after verification of marketable title and free from all encumbrances. The plaintiff was then said to have been informed by the fifth defendant, by a letter dated 4.5.1981 that it was not possible to obtain the consent of the Trust, and the plaintiff was said to have called upon to indicate whether he was ready to go ahead with the transaction even without the consent of the Trust. The plaintiff is said to have responded through a reply issued by counsel, that the consent of the Trust was relevant only for the payment of a further advance and that the defendants 1 & 2 were otherwise bound to complete the transaction and called upon them to do so. It transpires there was no further response by the said defendants. The plaintiff is then said to have issued a public notice through a newspaper that there was a subsisting agreement between him and defendant nos.1 & 2, and third parties were warned not to deal with the said defendants in respect of the said property. 7 In response to the above, the third and fourth defendants are said to have issued a notice through their counsel, dated 1.8.1981, that the said property did not belong to defendants 1 & 2, but belonged to the Trust. They had also mentioned the pending litigation in respect of the dispute between them. The plaintiff is said to have requested for full particulars of the litigation from defendant nos. 3 & 4 and also clarifications from defendant nos.1 & 2. It was stated that there was no further response from the defendants. It is stated that on 17.1.1983, defendant nos.1 & 2 are said to have returned the sum of Rs.1.01 lakh to the plaintiff, while indicating that the agreement was not capable of performance. The plaintiff is said to have returned the same to the said defendants.
4. It is in the above circumstances that the suit was filed for a judgment and decree against the defendants to declare that the agreement to lease contained in the letter-cum- 8 agreement dated 4.11.1980 is valid and subsisting and binding on the first and second defendants and for specific performance of the said contract. In the alternative, to refund the advance amount with interest at the rate of 18% per annum from the date of the suit and Rs.20,00,000/- by way of compensation or damages for non-performance of the contract, and interim reliefs during pendency of the suit.
5. Defendant nos. 1 & 2 had filed their written statement to deny the plaint averments and asserted that there was no concluded agreement entered into by virtue of the letter dated 4.11.1980, which was the basis of the plaintiff’s claim. It was however admitted that they had categorically informed the plaintiff that there was no possibility of any agreement of lease being entered into in view of the non- cooperation of defendants No.3 & 4 and hence they had returned the advance amount received on a tentative proposal having been made in terms of the letter dated 4.11.1980. 9 It was also stated that they had brought to the attention of the plaintiff, that they had acquired title to the property by adverse possession through the husband of defendant no.1 and the father of defendant no.2 - late V. Subbaiah, prior to 1971. And that there were three daughters of defendant no.1 and late Subbaiah, who also had acquired a share in the property and who were not parties to the suit. The suit was hence stated to be bad for non-joinder of necessary parties. It was also contended that the letter even if construed as an agreement, was not capable of enforcement as it would be against public policy, in that, there were statutory compliances required of the parties - under the provisions of the Urban Land (Ceiling & Regulation) Act, 1976, as well as a prohibition under the Karnataka Rent Control Act, 1961, which was uncertain and also impossible of performance, as the Court could not perform those acts in compliance thereof. It was pointed out that the alleged agreement was void on account of uncertainty and vagueness. There was no 10 indication as to who would maintain the property. There was no indication as to the use to which the property would be put to, whether it was to be developed and if the plaintiff could erect permanent structures without consent of the defendants. There was no indication of the plaintiff's right to sub-lease the property. It was also contended that the suit was not properly valued and no court fee had been paid on the claim for damages, in the alternative. The said defendants hence sought dismissal of the suit.
6. Defendant nos.3 & 4, in their written statement contended that defendants nos.1 & 2 had filed a civil suit against the Trust, in O.S.No.3035/1981, on the file of the City Civil Judge, Bangalore, claiming to have perfected their alleged title by adverse possession. And that the same was pending. Hence, it was evident that the Trust was the owner of the property. 11 It was contended that any alleged agreement was not binding on the Trust and therefore they were not necessary parties to the suit. It was asserted that the suit was misconceived and could not be decreed in the present form. Therefore it was claimed that the suit be dismissed.
7. Defendant No.6 had filed his written statement to claim that defendant nos.1 & 2 had entered into an agreement of sale with him in respect of the said property, under an agreement dated 10.1.1983 and that he had been put in possession of the same in part performance and that he continued to be in possession of the same. He adopted the written statement of defendant nos.1 & 2, and sought dismissal of the suit.
8. The court below had framed the following issues on the basis of the above pleadings: “1. Whether the plaintiff proves that there came to be a concluded contract between him and the defendant Nos.1 and 2?. 12 2. Whether the plaintiff proves that there is a valid subsisting and binding contract between him and the defendant Nos.1 and 2?.
3. Whether the plaintiff proves that he is ready and willing to perform his part of the agreement?.
4. Whether the plaintiff proves that he is entitled for specific performance of the agreement to lease?.
5. Whether the plaintiff proves that he is entitled for possession of the suit schedule property?.
6. Whether the plaintiff proves that he is entitled for the payment of Rs.1,01,000/- with interest at 18% per annum?.
7. Whether the plaintiff proves that he is entitled for compensation and / or damages of Rs.20,00,000/- with interest thereon at 18% per annum in lieu of specific performance?. 13 8. Whether the plaintiff proves that he is entitled for mandatory injunction?.
9. Whether the concurrence of defendant Nos.3 and 4 is necessary for the plaintiff to enforce the contract?.
10. Whether the plaintiff proves that he is entitled for a decree of injunction from compromising the suits in O.S.Nos.1947/1980 and 3055/1980 on the file of the Additional City Civil Judge, Bangalore?.
11. Is the suit properly valued?.
12. Is the court fee paid sufficient?.
13. Whether the defendant Nos.1 and 2 prove that the contract is forbidden in law and not enforceable as pleaded in para Nos.7 and 8 of their written statement?.
14. Whether the defendant Nos.1 and 2 prove that the contract is uncertain and impossible for performance?.
15. Whether the suit is premature?. 14 16. Whether the defendant No.6 prove that he is a bonafide purchaser for value without notice of the claim of the plaintiff?.
17. To what reliefs are the parties entitled to?.
18. To what decree or order?. Additional issues framed on 4.08.2001:
1. Whether the defendant Nos.1 and 2 prove that performance of agreement of lease would result in hardship to them?.
2. Whether defendant Nos.1 and 2 prove that enforcement of specific performance of agreement of lease is inequitable and it would give unfair advantage to the plaintiff over them and defendant No.6?. Additional Issue framed on 14.02.2002:
1. Whether the suit is bad for non- joinder of daughter of defendant No.1?.” 15 The court below has decreed the suit granting the alternative relief prayed for and has directed refund of a sum of Rs.1,01,000/- with interest at 6% , from the date of suit till payment, by defendants no.1 & 2 . The suit is dismissed as against defendant nos.3, 4 & 6. It is that which is challenged in this appeal.
9. Shri G. Krishnamurthy, learned Senior Advocate appearing for the learned counsel for the appellant would contend that the law does contemplate an agreement to lease in contrast to an agreement of lease, as a valid and enforceable contract. Such a contract was indeed to be found in the letter dated 4.11.1980, addressed to the appellant by defendant nos. 1 & 2. The said offer having been sealed by the payment of an advance amount towards the consideration consisting of a deposit and rent, for a specified term, there was a concluded contract which the court below has failed to appreciate and acknowledge. 16 It is pointed out that defendant nos. 1 & 2 had raised the plea of uncertainty of the terms of contract much after the filing of the written statement, which was filed on 8.12.1983 and the issues having been framed on 8.11.1985, by way of an amendment to the written statement, as on 24.1.2002. It was also significant that it was contended that the transaction was in the nature of a tentative understanding “subject to the consent of the trustees” and not for want of certainty or of any terms remaining unsettled. It is also asserted that the defendant nos.1 & 2 had not adduced any evidence as to the terms, which according to them had remained unsettled and there was hence no basis for the court below to have concluded that the contract was bad for uncertainty. It is contended that the court below has not given its findings on all the issues framed. The most crucial issue as to whether defendant no.6 could claim to be a bona fide agreement holder without notice of the suit contract. 17 It is urged that the court below having opined that the contract did not provide for the modalities as to maintenance of the property and the manner as to its user and the fate of structures that may be put up or the right to sub-lease the property etc., though not stated in the letter - did not make the contract inconclusive, as the provisions of the Transfer of Property Act, 1882, governing leases would apply, if the agreement to lease is silent on any aspect of the lease. It is also pointed out that the trial court was in error in forming an opinion that clause 3 of the letter dated 4.11.1980, suggested that the consent of the trustees was a condition precedent for the performance of the contract. That the trial court had failed to appreciate that on a plain reading of the clause, merely placed an obligation on the appellant to pay a sum of Rs.2 lakh if the trustees accorded their consent. In this regard it is further pointed out that it was defendant nos.1 & 2 who were unwilling to perform their part of the contract without such consent and not the plaintiff. 18 And further when it was held out by defendant nos.1 & 2 that they were the absolute owners of the property, the question of the trustees being part of the transaction was itself inexplicable. The requirement of statutory clearances under the Urban Land (Ceiling and Regulation) Act, 1976 or the Income Tax Act, 1961 were to be obtained by the defendant nos.1 & 2 and not the plaintiff and therefore the breach of contract was on the part of the said defendants which, according the learned Senior Advocate, the trial court had failed to appreciate. It is contended that the trial court was in error in having found that the transaction was entered into by the defendants under financial stress and hence it was inequitable to compel the said defendants to perform the same, in the absence of cogent evidence in that regard. And further, that the trial court having opined that the transaction entered into by defendants 1 & 2 with defendant no.6, in respect of the 19 property was more beneficial and the proposed contract with the plaintiff was not beneficial, seeks to completely ignore the substantial deposit of Rs.61.41 lakh that was to be made by the plaintiff.
10. Shri Krishnamurthy places reliance on the following authorities to contend as follows: (i) A concluded contract may be resolved by examination of its language, into an offer of the lessor to let, and an unconditional assent by the lessee to take the property on certain terms. The essential terms of an agreement for a lease are (1) the identification of the lessor and the lessee; (2) the premises to be leased; (3) the commencement and duration of the term; and (4) the rent and other considerations to be paid. If the matters just mentioned are ascertained to be thus offered and accepted, and providing the agreement is supported by consideration, this is sufficient. Any other matters incident to the relation of landlord and tenant, if not defined by the parties, are sufficiently defined by law. (See:
20. National Properties Ltd. vs. Bata India Ltd. AIR2001Cal 177). (ii) 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 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 straight jacket formula. These have to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned. (See: R.C. Chandiok and Another vs. Chuni Lal Sabharwal and Others AIR1971SC1238 21 (iii) In Smt. Chand Rani Mehr and others vs. Om Shankar Mehra AIR1987Delhi 194 : Two questions arose for consideration namely : (3) Whether it is open to the vendor to plead partial want of title in the subject matter of the sale as a bar to the relief of specific enforcement of the agreement to sell?. Or to put it in other words, is it open to the vendor to plead that he is not the absolute owner of the property and joint owners/co-owners are not willing to join him in the sale?. (4) What is the legal effect of an express stipulation in the contract of sale that the vendor is the absolute owner of the property agreed to be sold?. … After noticing the rival contentions and analyzing the case law on the point, the court has answered the above two questions as follows: (3) The vendor is estopped from pleading partial want of title in the subject matter. The other joint owners or co- owners are not concerned with the suit. 22 (4) The effect of the representation of title made in the sale deed by the vendor is that the vendor is estopped from showing that the said representation is incorrect or untrue. (iv) Suit was filed before the second sale of the property. Therefore, the principle of lis pendens will govern the present case and the second sale cannot have the overriding effect on the first. (See: Guruswamy Nadar vs. P. Lakshmi Ammal through LRs AIR2008SC2560. (v) …Oral evidence is not admissible for the purpose of ascertaining the intention of the parties to a written document and though attempts have been made to engraft an exception on this rule in favour of evidence relating to acts and conducts of the parties, it is now settled that such evidence is inadmissible. (See: Gurubasappa and Others vs. Gurulingappa AIR1962Kant
246) It is hence contended that the suit be decreed for specific performance of contract. 23 11. Per contra, Shri B. V. Acharya, Senior Advocate, appearing for the learned counsel for defendant nos. 1 & 2 would contend that according to the plaintiff, he was ready and willing to obtain the lease of the property as per the agreement, even without the consent of Dinshaw Trust. In the reply notice Ex.P.3 dated 25.05.1981, he claimed that such a consent was needed only for payment of further amount of Rs.2.00 lakhs and not for entering into lease deed. Though it is so stated in the reply notice, in the course of evidence, the plaintiff has admitted repeatedly that he was not willing to take the property on lease unless the defendants obtained consent of the Trust. In the course of evidence, i.e., in the cross- examination he has stated as follows: “During the negotiations it was made known to me that the Defendants 3 and 4 are wrongly claiming right over the property and litigations are pending. I was not prepared to purchase the property unless the litigation is cleared. It is true that getting the consent of Defendants 3 and 4 was condition precedent 24 for completion of the transaction. It is true that in this ground the condition was put up in “Ex.P.1 that Defendants 1 and 2 should get the consent of Defendants 3 and 4.” Later he says that: “When Defendants 1 and 2 under Ex.P.2 informed that Defendants 3 and 4 are not giving consent I was not prepared to complete the transaction unless their consent is given. One Pazal Mastry discussed the terms of lease. Legal opinion was taken to incorporate all the terms and conditions from the lease deed. The terms of the lease deed to be executed are not finalized.” Thus, it is clear that after Ex.P.2 till filing of the suit for over two years, the plaintiff was not prepared to enter into the transaction of lease unless the consent of Defendants 3 and 4 were obtained. His claim in Ex.P.3 is really not true. The above admissions of the plaintiff clearly show that he was not ready and willing to perform his part of the contract. 25 The other circumstances which according to the learned Senior Advocate shows that the plaintiff was not willing to perform his part of the contract are, he did not call upon the Defendants 1 and 2 to execute the deed and there was not even an oral demand. Draft of the lease deed to be executed was not sent to Defendants 1 and 2. Further, the plaintiff had applied for necessary permission from Income Tax Authorities only in the year 1987 and the permission sought for had been rejected. In the circumstances, the contract had become impossible of performance. Further, the required permission of the Urban Land Ceiling Authority had also not been obtained. Thus, it was clear that the plaintiff was not ready and willing to perform his part of the contract. The further contention of the learned Senior Advocate Shri Acharya is that the plaintiff had taken undue advantage of the helpless position of the fourth defendant who was admittedly an illiterate widow. That hardly five years prior to the execution of Ex.P.1, her husband had died. She being 26 from a poor family, was in heavy debt after giving in marriage her two daughters. Further, there were several litigations instituted by the Trust as well as the tenants which were pending against her, due to which she was suffering from tension and worry. She was not worldly-wise. The plaintiff who was a rich builder and developer, had managed to secure the lease in his favour for a period of 296 years, that too by paying a meagre advance of Rs.1.01 lakh, which is wholly unconscionable. The said advance was also returned in the year 1983, but the same was refused by the plaintiff. Further, uniform rent was fixed without any periodical enhancement and that there is no provision for forfeiture clause or re-entry clause. In the deed, there is also no requirement of putting up any building which should go to the landlord at the time of completion of the term of lease. Further, in the deed, even a default clause was not included for non-payment of rent. Hence, it is submitted by the learned Senior Advocate that it is a one-sided agreement which the plaintiff had forced upon 27 Defendants 1 and 2. The plaintiff admittedly had not changed his position to his disadvantage nor had he spent any amount. In the circumstances, it is submitted that it would be inequitable if specific performance of contract is ordered. The Trial Court has rightly exercised discretion to refuse specific performance of contract and it is contended that there is no ground made out for reversing the order of the court below and exercising discretion in favour of the plaintiff.
12. Shri B.V. Acharya places reliance on the following authorities: (i) K.S. Vidyanandam & others vs. Vairavan 1997 (3) SCC1(ii) K. Narendra vs. Riviera Apartments (P) Ltd 1999 (5) SCC77(iii) M.V. Shankar Bhat & another vs. Claude Pinto since (deceased) by LRs & Others (2003) 4 SCC8628 (iv) A.C. Arulappa vs. Smt. Ahalya Naik AIR2001SC2783(v) Babu Rameshwar Prasad Sahi vs. Mst. Anandi Devi & Another AIR1956Patna 53 (vi) Shib Kumar Banerjee vs. Rasul Bux AIR1959Calcutta 302 (vii) Nanjappan vs. Ramaswamy & Another CDJ2015SC173(viii) Mayawanti vs. Kaushalya Devi (1990) 3 SCC1 In the light of the principles reiterated in the above decisions, Shri Acharya would contend that the same can be aptly applied to the facts and circumstances of the case and seeks dismissal of the appeal.
13. In the light of the rival contentions and on a perusal of the record, the points that arise for consideration in the present appeal are:
29. a. Whether there was a concluded contract between the plaintiff and defendant nos. 1 & 2?. b. Whether any such contract was capable of being enforced?. c. Whether the plaintiff had established his readiness and willingness to perform his part of the contract?. d. Whether the enforcement of the contract would cause hardship and inequity to the defendants?. e. To what relief, if any, was the plaintiff entitled to?.
14. Before addressing the above points for consideration, it is to be noticed that the trial court had framed as many as 21 issues, which have been answered while combining several issues to-gether. The findings of the trial court are as follows : i. There was no concluded contract between the plaintiff and defendant nos. 1 & 2, in terms of Exhibit P-1. ii. Even assuming that there was a semblance of a concluded contract, it was impossible of enforcement. 30 iii. The plaintiff had failed to establish his readiness and willingness to perform his part of the contract. He had admitted that he was not ready to go ahead with the transaction without the consent of Defendants 3 & 4. iv. The plaintiff was not entitled to any injunctory reliefs or for possession. v. The plaintiff was held entitled to Rs.1,01,000/-, with interest at 6 % per annum from the date of suit till payment , payable jointly and severally by defendants 1 & 2 . It is the above broad findings by the trial court that are questioned in this appeal. In order to appreciate the correctness of the above findings, the points for consideration framed by this court are taken up. The plaintiff has relied upon a letter dated 4.11.1980, produced and marked in evidence as Exhibit P-1, to claim an agreement to lease the suit property in his favour by defendant nos. 1 & 2. The contents of the said document are reproduced hereunder for ready reference. 31 “From: Date:
4. 11.80 Smt. Narasamma, W/o. late Subbiah & Sri. Venkatanarayana, S/o. late Subbiah, No.5, (New No.9) Cunningham Crescent Road, Bangalore-560 052. To: Sri. Arjun M. Menda, St. Joseph’s Building Complex, 28, Mahatma Gandhi Road, Bangalore-560 001. Dear Sir, Re: Plot No: Old No.5 New No.9, Cunningham Crescent Road, situated: Bangalore- 560 052. Measuring 1,28,000 sq.ft. together with the structures standing thereon. This is to record that we are the absolute owners of the above property, and we have agreed to grant lease of the above plot No.Old No.5, New No.9, Cunningham Crescent Road, admeasuring 1,28,000 sq.ft. together with the structures standing thereon, on the following terms and conditions:- 32 1. Total deposit payable by you, at the time of completion of transaction would be Rs.48/- (Rupees forty eight only) per sq.ft. of area to be ascertained by Joint survey reduced by any sum received as advance before the completion of the transaction.
2. Out of the above deposit, I confirm having received advance of Rs.1,01,000/- (Rupees one lakh one thousand only) this day by cheque No.751954 drawn on Vijaya Bank, Mayo Hall Branch.
3. You would give a further amount of Rs.2,00,000/- (Rupees Two Lakhs Only) as advance towards deposit, after Trustees of Dinshaw Trust give their consent in writing for this agreement of lease.
4. You would pay lease rent Rs.16,700/- (Rupees Sixteen thousand seven hundred only) per month for an area of 1,28,000 sq.ft. payable on the expiry of two years from the date of handing over possession. In case the area is 33 found to be different after the Joint survey the lease amount would be changed accordingly.
5. Period of lease:
98. plus 98 years. Option to you for further renewal of 98 years on the same terms and conditions.
6. We shall make out a marketable title free from encumbrances, prior to completion of the transaction.
7. We shall execute a lease in your favour or in favour of your nominee or nominees, as desired by you.
8. We shall hand over to you vacant possession of the property after the title is certified as marketable and free from encumbrances.
9. We shall clear all outstanding dues, charges, Municipal and collectors bills to be paid if any, prior to handing over of possession.
10. We have not received any notice of acquisition or requisition in respect of the above property. If any such notice is received prior to 34 completion of the transaction, we shall clear the same at our cost.
11. If there are any betterment charges payable then we shall pay and clear the same before the completion of the lease.
12. All out of pocket expenses, costs and charges including stamp duty and registration charges shall be borne and paid by you alone.
13. We have not entered into any agreement to lease / sale of the above property with any other party.
14. The tenure of the land is freehold.
15. The transaction is to be completed within 4 months from the date you accept the title to be marketable, provided by that time we have obtained the necessary permission under the Urban Land Ceiling Act and Income Tax Certificate under Section 230A of the I.T. Act. 35 16. We shall obtain Urban Ceiling Clearance Certificate for the entire property under Section 27 of the Act.
17. We shall hand over the title deed to you or to your Advocate solicitor within one week from the date of this Agreement.
18. Each party shall bear and pay their respective solicitors and / or Architects professional fees and other charges. Kindly confirm at the foot hereof as a token of your approval. I CONFIRM SCHEDULE:- Yours faithfully, Witnesses: Land measuring about 3 acres to the North of Cunningham Crescent Road having Corporation Old No.5 (New No.9) bounded by North : Millers Tank South : Private property and Cunningham Crescent Road (Beyond this vacant land 36 LISMOILE & KENILWORTH) East : Kamala Bai Girls High School West : Binny Quarters and other Private property.” It is to be noticed that an essential term as to when the lease would commence is uncertain. There is a stipulation to the following effect: “15. The transaction is to be completed within 4 months from the date you accept the title to be marketable, provided by that time we have obtained the necessary permission under the Urban Land Ceiling Act and Income Tax Certificate under Section 230A of the I.T. Act.” As can be seen, there are two contingencies from which time would begin to run, to complete the transaction. The first requirement of acceptance of a marketable title to the property by the plaintiff, had never come about. 37 As per exhibit P-2, a letter dated 4.5.1981, the plaintiff is informed that it was not possible to obtain the consent of defendants nos.3 & 4 and the plaintiff was called upon to indicate whether he was willing to go ahead with the transaction without such consent. Though there is a reply dated 25.5.1981 issued on behalf of the plaintiff to claim that the consent of defendant nos. 3 & 4 was relevant only in order to pay a further advance of Rs.2 lakh, and that the parties are bound by the letter dated 4.11.1980, to perform their respective obligations, the plaintiff has not chosen to take any positive steps to enforce the agreement , till the filing of the suit as on 16.5.1983. There is no averment in the plaint that the plaintiff has satisfied himself that the defendant nos.1 & 2 have a marketable title to the property. There is also no averment in the plaint that the statutory clearances to be obtained by the defendants, as on the date of the suit were no longer relevant or that the same could also be enforced in the suit. It is hence 38 not clear as to when the term of the lease was to commence. Such an agreement which does not disclose as to when the term of lease shall commence is not capable of being enforced. ( See : Giribala Dasi v. Kalidas Bhanja and others , AIR1921PC71 15. In the above view of the matter, Point (a) & (b), are answered in the negative. Further, the plaintiff being certain that the defendant nos. 1 & 2 had no clear title to the property and that without the consent of Defendant nos. 3 & 4, there could not be a valid lease deed, is evident from the fact that the plaintiff has not sought to force the hand of the said defendants to execute the lease deed. And as pointed out by Shri Acharya, the plaintiff has admitted in the course of cross-examination that he was not prepared to purchase the property unless the controversy as regards the title to the property as between defendants 1 & 2 on the one hand and defendant nos. 3 & 4 on the other was sorted out. It was also admitted that no 39 steps were taken to obtain the necessary statutory clearances by defendant nos. 1 & 2 in respect of the transaction. Hence, it is evident that the plaintiff was not ready and willing to perform his part of the contract without the consent of defendants 3 & 4. Inspite of defendants 1 & 2 have categorically stated that they were no longer in a position to obtain such consent. Point (c) is answered accordingly. The alleged agreement is more than 35 years old. The defendants to be held bound by the same at this point of time would be wholly unjust. The property is in a prime location of Bangalore City. The property is now worth several hundred times the value contemplated under the above proposal. In this regard it is useful to note the following observations of the Apex Court in the case of Saradamani Kandappan v. S.Rajalakshmi , AIR2011SC3234 “27. A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S. Vidyanandam and others vs. Vairavan- (1997) 3 SCC140 (by Jeevan Reddy J.
who incidentally was a member of the Constitution Bench in Chand Rani vs. Kamal Rani AIR1993SC1742. This Court observed:
"It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. In the case of urban properties in India, it is well- known that their prices have been going up sharply over the last few decades - particularly after 1973. .........We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties - fuelled by large scale migration of people from rural areas to urban centres and by inflation. Indeed, we are inclined to think that the rigour 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."
(emphasis supplied) Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with 41 regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to larger bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and other cases. Be that as it may.
28. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanandam (supra) : (i) Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. (ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was ‘ready and willing’ to perform his part of the contract. (iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also `frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a 42 suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser.” 16. In the above view of the matter, Point (d) is answered in the affirmative. It would be wholly unjust to hold the defendants liable under the above said transaction. The plaintiff having paid a nominal amount of Rs.1.01 lakh is not in dispute. Though the defendants had sought to refund the same and the plaintiff having refused to receive the same, the defendants could have deposited the amount before the trial court during the pendency of the suit. As the defendants had continued to have the benefit of the same, they would be obliged to refund the same to the plaintiff as directed by the trial court. The interest awarded is reasonable and does not merit reconsideration. Point (e) is answered accordingly. 43 In the result, the judgment of the trial court is affirmed though for reasons as stated above. The appeal is dismissed. Sd/- JUDGE KS*