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Shankar Sakharam Jagdale Vs. Ratanji Premji Shet - Court Judgment

LegalCrystal Citation
Decided On
Case NumberSecond Appeal No. 737 of 1921
Reported inAIR1923Bom441; (1923)25BOMLR328; 79Ind.Cas.226
AppellantShankar Sakharam Jagdale
RespondentRatanji Premji Shet
DispositionAppeal allowed
Excerpt: the plaintiff:; dismissing the application for execution, (1) that on the construction of the terms of the compromise decree, time was of the essence of the contract and as there was no waiver or new agreement the defendant was oat of time.;that, even if time was not of the essence of the contract, as there was an unexplained delay of one year in applying for the execution of the decree the defendant was not entitled to obtain specific performance of the terms of the compromise decree.; it is not a general principle that in no case can the terms of 9, consent decree be varied.; krishnabai v. hart govind (1906) 8 bom. l.r. 813 : i.l.r. 31 bom. 15 f.b. and supdu dhodu v. madhavrao jivram (1919) 22 bom. l.r. 780 : i.l.r. 44 bom. 544 referred to. - section 3: [s.b. mhase, d.s. bhosale & say more than that the circumstances indicate a very clear intention on the party of the contracting parties to make time an essential part of the contract.12. at page 60 the learned judge said:when parties, who have bound themselves by a written agreement, depart from what has been so agreed on in writing, and adopt some other line of conduct, it is incumbent on the party insisting on, and endeavouring to enforce, a substituted verbal agreement, to show, not merely what he understood to be the new terms on which the parties were proceeding, but also that the other party had the same understanding-that both parties were proceeding on a new agreement, the terms of which they both understood.13. then at page 61 he says:both parties showed by their conduct that they did not intend.....

Marten, J.

1. The question in this case is whether, notwithstanding the lapse of time and the conduct of the parties, it is still open to the defendant to enforce the compromise embodied in the consent decree (Exhibit 28) in this suit.

The plaintiff and defendant are adjoining owners, and it would appear that before the commencement of this litigation the western wall of the plaintiff's building was a mud wall, and that the eastern wall of the defendant's building adjoined it. The defendant wanted to rebuild his house and in the course of that rebuilding the plaintiff alleged that the defendant encroached upon his, the plaintiff's, rights. Thereupon this suit was brought for an injunction and other relief.

2. On January 29, 1920, the parties arrived at 'the compromise in question which is embodied in Exhibit 28. To indicate very briefly the nature of the point this Court has to decide, I will state that there is a provision in that compromise for the payment by the defendant of a certain sum of money and the building of a new wall within two months from the date of that compromise. Admittedly the money was not paid nor the wall built within the two months. So far as the evidence before us is concerned, nothing was done by either party until the defendant took out the present Darkhast of March 30, 1921 Exhibit 1. That Darkhast states that the defendant told the plaintiff several times in accordance with the terms of the decree to do certain things. But apart from that mere statement in the Darkhast which is not evidence, there is no evidence before us at all of any intervening acts of the parties after the date of the decree. We have, therefore, a lapse of time of just over one year from the date fixed by the compromise for the performance of these acts.

3. The defendant's answer is that his acts of payment of the money and the building of the new wall were all conditional upon the plaintiff first pulling down an old wall, and that as the plaintiff did not pull down that old wall, he, the defendant, is absolved from strict compliance with the provisions as to time inserted in the compromise. The Darkhast (Exhibit 1) is based on the defendant's view of the true construction of the contract. There he asks that the plaintiff should be made to pull down the old wall, and that if he does not do it, the Court should have it done and direct payment of the costs out of the money the defendant was to pay. He makes there no offer of his being ready and willing to pull down the old wall at his own expense, supposing the Court is against his view of the contract. However before us, at the conclusion of the argument of his pleader, the defendant undertook to pull down the wall at his own expense, supposing the Court was against him on the true construction of the compromise.

4. It is, therefore, in the first place, of importance to see what actually was the compromise which the parties arrived at. [His Lordship after discussing the terms of the compromise set out in the statement of facts proceeded:

5. First of all, then are we to consider that time was of the essence of the contract under this compromise? In the view I take, I am disposed to think that the parties did intend that time should be of the essence. This 'two months' is mentioned in a couple of places. There was already litigation between the parties. The defendant on the one hand was presumably wishing to get on with his new building. The plaintiff on the other hand had alleged that his old wall was damaged. It seems to me, therefore, quite consistent with the actual words used by the parties, that the two months which they stipulated for was the time intended to be kept, unless there was a subsequent agreement by both parties to the contrary.

6. The respondent has cited to us a decision of Mr. Justice Beaman sitting with Mr. Justice Heaton in Bhagvant v. Appaji : AIR1916Bom282 where the learned Judge is expressed to enunciate the law in these terms (p. 805):

Speaking here for myself, I have not much admiration for the equity rule that in baying or selling or otherwise transferring real estate a man must never be allowed to mean what he says. That if he says the bargain is to be concluded within six months, he must not be taken to mean six months, but any reasonable time which, according to the view of the Courts, may extend to six or sixty years. The rule is, however, venerable and has the sanction of such high authority that it is useless now to criticise it.

7. With great respect to the learned Judge, the equity rule which he is there expressed to lay down is not, I venture to think, to be found in any of the authorities recognised by the legal profession at large. The real equity rule is based on, or may be expressed, in much the same terms as will be found in the Indian Contract Act, Section 55, and is to the effect that the question whether time is of the essence of the contract depends on the intention of the parties. Equity has never laid it down that a man must never be allowed to mean what he says. Still less-I say this without looking up the authorities but in perfect confidence-will it be found that there is any case in England or elsewhere where a Court has decreed specific performance of an agreement to sell property after a lapse of sixty years. Nor will it do so after a lapse of six years, unless the parties themselves have expressly extended the time for completion.

8. A case, which is often useful to refer to where acts have to be performed within a certain time, and more especially if it is alleged that there has been a waiver, is Earl of Darnley v. Proprietors, &c.; of London, Chatham, and Dover Railway (1867) L.R. 2 H.L. 43. There an agreement between Lord Darnley, the land-owner, and the railway company was embodied in a private Act of Parliament, under which the railway company obtained their statutory powers to build the railway. By Article 10 of that agreement, the company agreed-

to make and maintain, for the convenience of the Earl's estate, so many crossings across the extension railway, and of such kinds, whether above, below, or on the level, as Mr. John Glutton, or him failing, the engineer or surveyor of the Earl, his heirs or assigns, shall within one month, after obtaining possession of the land of the Earl, direct and notify in writing to the company or their engineer.

9. The requisite notification was not given to the railway company, but in ignorance of the real facts, the railway company took up an award that was made under the agreement, and it was then said that they have waived the provision as to time. It appears from the judgment of Lord Cranworth at p. 59 that-

The only written direction and notification which he ( Mr. Clutton) made was made on the 5th of March 1859, being nearly three months, instead of one month, after the respondents had got possession of the land.

10. The learned Judge proceeds:

It was, therefore, impossible for Lord Darnley to obtain a decree for specific performance of the agreement on the ground that Mr. Clutton had, in the stipulated mode and at the stipulated time, indicated what was to be done. It was argued, however, that relief ought to be given on one of two grounds: either that the agreement did not mean to make the one month an essential condition of the contract; or, if it. did, then there was a waiver.

11. Then the learned Judge proceeds:

On the first point it is unnecessary to say more than that the circumstances indicate a very clear intention on the party of the contracting parties to make time an essential part of the contract.

12. At page 60 the learned Judge said:

When parties, who have bound themselves by a written agreement, depart from what has been so agreed on in writing, and adopt some other line of conduct, it is incumbent on the party insisting on, and endeavouring to enforce, a substituted verbal agreement, to show, not merely what he understood to be the new terms on which the parties were proceeding, but also that the other party had the same understanding-that both parties were proceeding on a new agreement, the terms of which they both understood.

13. Then at page 61 he says:

Both parties showed by their conduct that they did not intend to act on the strict terms of the written agreement; but no definite terms were agreed on as to what was to be substituted for it. The Court is left to discover that solely from the conduct of the parties; and that in quite as consistent with the understanding of Mr. Cubitt as of Mr. Clutton.

14. Now I agree that the present is not the case of a railway company building a railway, when no doubt it would be of great importance to know, at the earliest possible date, what level crossings would have to be constructed. But I have already indicated the grounds of considering that time was of importance to the present parties, and Lord Darnley's case may perhaps be regarded as at any rate one instance where equity did not prevent the parties from carrying out what they meant.

15. In that view of the case, therefore, namely, that time was of the essence of the contract, for that is the view which I personally take, the defendant is out of Court because he was a year out of time, and no waiver or a new agreement has been shown to have taken place.

16. But supposing time was not of the essence of the contract, could the defendant even then, after this lapse of time, obtain specific performance of this agreement? We have no explanation of the delay except in so far as one can infer from the present contentions of the parties, that the question as to who was to pull down the old wall was the real bone of contention. One knows that in most cases an unexplained delay of one year or even less is sufficient to negative the rights of a party to obtain specific performance. If parties will sleep on their alleged rights, they cannot expect a Court of Equity to give them the special relief which it is able to give. On the facts as they come before us then, I think that on this ground also the defendant has failed to establish his right to obtain the relief laimed in his Darkhast.

17. One other point I will mention which was relied on by the plaintiff. It is unnecessary for me to decide it, but it was claimed in reliance on Lachiram v. Jana Yesu : AIR1914Bom127 that a consent decree differs from a contract inasmuch as you can never vary its terms except by consent. Now in a broad general sense I understand that proposition, but to my mind it cannot be laid down in that hard and fast way as being an universal proposition capable of no explanation or deviation. Admittedly one exception is in cases of landlord and tenant, and it is sufficient to say that the point was considered by Sir Norman Macleod and Mr. Justice Heaton in Supdu v. Madhavrao : (1920)22BOMLR780 where Sir Norman said : 'The Court cannot lay down a general principle that in no case can the terms of a consent decree be varied'. In that particular case the Chief Justice thought that the consent decree amounted in effect to a redemption decree. Mr. Justice Heaton thought the contract they were there concerned with was something like an agreement; of sale and something like a mortgage; but whichever it was, the Court was entitled to give relief in that particular case.

18. One important distinction of fact exists between that case and this. In Supdu v. Madhavrao there was a preliminary payment to be made, and the Court held that the really important date was when possession of the lands was to be given, and that accordingly as the first payment, though made late, was paid long before the date fixed for possession, the delay in question should be excused. Here we have nothing of that sort. The date for giving completion or possession, whatever one likes to call it, was two months from the date of the compromise. Nothing was done up to that date: nothing was done afterwards. So that there seems to me a broad distinction of fact between that case and the present one.

19. There are also clear grounds on which the other decision I have referred to, viz., of Mr. Justice Beaman in Bhagvant v. Appaji : AIR1916Bom282 could be sustained, because it would appear there that the contract had been partly performed by the party who was late in performing it. He had apparently carried out certain building operations, and under these circumstances if the other party chose to stand by, seeing money expended and knowing that time had elapsed, it may be that on equitable principles he would be estopped when the work was completed from turning round and saying 'I will accept that work, but I won't perform my part of the contract, because your work was performed late'. If here, for instance, the defendant had built that new wall, and had finished it one or two months late without any objection by the plaintiff, in my opinion the plaintiff would not have been able to turn round and say: 'I will accept that nice new wall, but as you built it late, I won't allow you to use the passage way of three feet. I shall claim to retain that as my own.

20. Under all the circumstances of the case, therefore, I think the conclusions arrived at by the lower Courts were incorrect, and that this appeal must be allowed with costs against the defendant throughout.

21. The effect of our decision is to render the compromise arrived at nugatory. But in this connection I should mention what Mr. Thakor, counsel for the appellant, has told the Court. He said: 'I have definitely elected to treat the terms of the decree as at an end and nugatory, and therefore I forego any relief in my suit'. I say this to prevent it being suggested that it is now open to the plaintiff' to go on with his suit as if there never had been any decree passed in it, or to go on at all. As far as I can see, this suit is ended except in so far as any execution as regards costs is concerned.

Fawcett J.

22. The judgment just delivered by my learned brother deals very fully and clearly with the questions arising in this appeal, and I concur generally in his observations.

23. I think the first question to decide is whether we are prevented in any case from granting equitable relief to the defendant against the condition in the consent decree requiring payment and the building of a certain wall within a period of two months. The appellant's pleader relied upon Lachiram v. Jana Yesu : AIR1914Bom127 which, if accepted, might be held to prevent a Court exercising this equitable jurisdiction, in any case where there was a consent decree, except where that decree itself established the relationship of landlord and tenant. But such a reading of the Full Bench decision in Krishnabai v. Hari Govind I.L.R. (1906) 31 Bom. 15 : 8 Bom. L.R. 813seems to me entirely to ignore the basis of the judgments of Sir Lawrence Jenkins and Mr. Justice Beaman, which proceed mainly upon the view taken in Wentworth v. Bullen (1829) 9 C. 840 that 'the contract of the parties is not the less a contract, and subject to the incidents of a contract, because there is superadded the command of a Judge'. That is a general principle, and the Court adopted it in overruling the previous decision of this Court in Shirekuli Timapa Hegda v. Mahablya I.L.R. (1886) 10 Bom. 435 that the doctrine of equitable relief against penalties could not be given effect to as regards the compromise of a suit It seems quite clear that the case of Krishnabai v. Hari followed the Madras High Court in dissenting from Shirekuli Timapa Hegda v. Mahablya. A similar view is also taken by the Calcutta High Court, and a recent ruling to that effect is reported in Gopal v. Hari (1921) 34 C.L.J. 157 based again upon the same case of Wentworth v. Bullen.

24. Therefore, so far as Lachiram. v. Jana contravenes what has been actually laid down in the Full Bench case of Krishnabai v. Hari, it is not, I think, binding upon us, and we have, as already pointed out by my learned brother, the authority of Supdu v. Madhavrao : (1920)22BOMLR780 for holding that there is no general bar against equitable relief in cases of this nature, and that each case must be considered on it's own merits.

25. In this particular case the main question we have to consider is whether time is or is not of the essence of the contract, and the relief which a Court of Equity gives in oases of this nature is (as stated in Halsbury's Laws of England, Vol. XIII, Article 182, page 154), analogous to relief against forfeiture. The condition as to the time within which the defendant should do the acts of payment and building is contained in a separate clause of the compromise, and it seems to me that prima facie the intention of the parties was that time should be of the essence of the contract. It is obvious that the plaintiff might be put to very serious inconvenience, if he was to remain in suspense for a considerable period as to whether the western wall of his house and the stone wall of the rear compound were to be pulled down or not; and inasmuch as the land in question under the compromise admittedly belonged to the plaintiff, so that compensation was given to him in respect of it, he would be in a dominant position, enabling him to stipulate that the proposed alterations must be carried out within a fixed time. This is only an application for execution and not a regular suit, and therefore no evidence has been recorded which might help the Court in deciding this question whether time was or was not of the essence of the contract. But the parties could have asked the Judge to record such evidence, if there was anything material to be brought to notice, and as they have not done so, we can only decide the question upon the available materials. I concur, therefore, with my learned brother in thinking that on those materials we should hold that time was intended to be of the essence of the contract.

26. But the respondent's pleader contends that the compromise contemplates that the plaintiff should first pull down his wall and that until he did so no obligation arose against the defendant. On this point I concur with my learned brother that the probabilities are that the intention was for the defendant to pull down the wall. If the intention had been that the plaintiff should do so, the natural thing would have been to have inserted this clearly in the first part of clause lot the compromise, where the obligations upon the plaintiff are first of all stated. On the contrary the reference to the pulling down of the wall appears in Clause 2 of the compromise-a clause which deals mainly with the acts that had to be performed by the defendant, the only clear exception being the plaintiff's supply of certain doors and windows for the new wall. The pulling down of the wall would not be a costly operation, so that it would naturally be put upon the plaintiff rather than the defendant. Therefore I do not think we ought to accede to this argument.

27. But, even supposing that this was the real intention, it does not, in my opinion, follow that the defendant could stay quiet indefinitely and come at his own leisure and convenience to the Court to ask for relief of the kind he is now seeking. The compromise itself says that the new wall should only be built after the other wall had been pulled down, and as the new wall was to be built within two months, the obvious intention was that the pulling down of the old wall should be done within the same period, and necessarily at an early stage, so as to admit of the new wall being built within the period of two months. This circumstance clearly imposed an obligation upon the defendant, if he found the plaintiff neglecting to pull down the wall in sufficient time to enable him to comply with the time-limit of the compromise, to take some definite steps to remedy this. He could, for instance, have sent him a written notice, say three weeks after the date of the compromise. But it is not suggested that any such step was taken, and the defendant rested on his oars for about a year.

28. That being so, I think that the Court should act upon the principle that the plaintiff in equity is bound to prosecute his claim without undue delay, and that a Court of Equity should refuse to comply with his demands, where the plaintiff has slept upon his rights and acquiesced for a great length of time. I think also a further reason for such refusal is the principle on which the Court acts in an analogous case of reduction of the amount payable by a debtor to a creditor. This is dealt with in Article 179 at page 152 of Halsbury's Laws of England, Vol. XIII, as follows:

Where money is actually payable, or to become payable, a provision may validly be made for diminishing the amount, or making it payable by installments, or allowing other concessions to the debtor upon stipulated terms; and if the debtor complies with the terms he is entitled to the benefit to the provision. But he must purchase the benefit by strict compliance with the terms; and, if he is in default, the full debt is payable and he cannot claim relief as against a penalty.

29. I do not say that this case directly falls under that rule of law, but in this particular case the main concessions seem to have been made by the plaintiff for the benefit of the defendant. In particular, I refer to the grant of three feet of land as a space between the two houses. That concession is given upon certain terms with which (on the principle just referred to) the defendant, being thus benefited, must strictly comply. This is only another instance of the principle that the Court will not grant relief to a person who has slept upon his rights.

30. I would only add that I do not think that the ruling in Bhagvant v. Appaji : AIR1916Bom282 affects our decision in this case. That was a case where there had been a part performance of the conditions, and the facts are clearly very different from those of this case.

31. I concur, therefore, with my learned brother that the appeal should be allowed with costs.

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