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Tandra Venkata Subrahmanayam Vs. Vegesana Viswanadharaju and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal No. 553 of 1963
Judge
Reported inAIR1968AP190
ActsIndian Contract Act, 1872 - Sections 55 and 64; Code of Civil Procedure (CPC), 1908 - Sections 100 and 101; Specific Relief Act, 1877 - Sections 22; Specific Relief Act, 1863 - Sections 20
AppellantTandra Venkata Subrahmanayam
RespondentVegesana Viswanadharaju and anr.
Appellant AdvocateBala Parameswari Rao, Adv.
Respondent AdvocateA. Gangadhar Rao and ;M. Bhujang Rao, Advs.
DispositionAppeal dismissed
Excerpt:
contract - sale of land - sections 55 and 64 of contract act, 1872, sections 100 and 101 of code of civil procedure, 1908, section 20 of specific relief act, 1963 and section 22 of specific relief act, 1877 - suit for specific performance of contract and recovery of damages - relief of specific performance cannot be claimed as matter of course - lies in discretion of court - delay in filing suit does not deprive plaintiff of relief - contract when not performed by either party becomes voidable - fact that notice gave certain time to perform contract not necessarily lead to conclusion that prescribed time was essence of contract. - - his previous as well as subsequent conduct brings out prominently the fact that he had never any intention to make time the essence of contract......however, refused to grant the decree for specific performance on the ground that in spite of the notice (exhibit a-5) plaintiff kept quiet for over 19 months without filing the suit and in the meanwhile allowed the 1st defendant to convey the property in favour of the 2nd defendant. after such a long lapse of time thought the trial court, it will not be just or equitable to disturb the rights of the 2nd defendant acquired under the sale deed (exhibit b-8). the learned district munsif thought that the appropriate relief in the circumstances would be the grant of a decree for the refund of the amount advanced by him together with damages. consequently a decree for a sum of rs. 1050 together with interest at the rate of 5 1/2 per cent per annum was granted against both the defendants.5......
Judgment:

1. This appeal is from the judgment and decree of the Subordinate Judge, Eluru given on 23rd March, 1983. It arises in the following circumstances. The plaintiff, 1st respondent filed the suit for specific performance of an agreement of sale dated 22-4-1959 (Exhibit A-1) executed by the 1st defendant in his favour and for recovery of damages of Rs. 200. He claimed in the alternative a sum of Rs. 2700 as compensation. It was alleged that the 1st defendant, who is the owner of the suit land, agreed to sell the same for a sum of Rs. 2450 to the plaintiff and executed Exhibit A-1 after receiving an advance of Rs. 750. According to the terms of the agreement the balance had to be paid on or before 31-5-1959 and the sale deed was to be executed. It is alleged that the plaintiff was always ready and willing to perform his part of the contract, but the 2nd defendant sent a notice to the plaintiff on 22-5-1959 (Exhibit A-2) asserting that the 1st defendant sold the suit land to him under an oral agreement and warned the plaintiff that if he obtained any sale deed in his favour from the 1st defendant it would not be binding upon him. On enquiries, however, the plaintiff came to know that the alleged oral agreement was not true and genuine. The plaintiff accordingly sent a reply to the 2nd defendant. The 1st defendant told the plaintift that there was no cause to worry since he had not entered into any oral agreement with the 2nd defendant. It was further alleged by the plaintiff that on 26-6-1959 he paid a further sum of Rs. 400 towards part payment of the sale price and the 1st defendant told him that he has got stamps worth Rs. 40 and the plaintiff should purchase stamp for Rs. 160. The plaintiff accordingly purchased stamps and went to the 1st defendant alone with one K. Satyanarayanamurthy and offered to pay the balance and demanded the execution of the sale deed, but the 1st defendant in collusion with the 2nd defendant evaded to execute the same The plaintiff therefore had to issue a notice on 11-9-1959 (Exhibit B-4) to the 1st defendant demanding the execution of appropriate sale deed. The 1st defendant however sent a reply on 28-12-1959 (Exhibit A-5) with false allegations that he had not received Rs. 750 by way of advance but only Rs. 50 and asked the plaintiff to pay the balance within 15 days and get the sale deed executed. Otherwise, he will sell the suit property to others. Without executing the sale deed in favour of the plaintiff, the 1st defendant executed sale deed in favour of the 2nd defendant (Exhibit B-8) on 81-10-1960. The suit therefore was instituted by the plaintiff for specific performance on 23-7-1961.

2. The contention of the 1st defendant was that he received only Rs. 50 as advance and not Rs. 750 as was alleged by the plaintiff. He denied the oral agreement dated 20-3-1959 set up by the 2nd defendant and the payment of Rs. 500 in pursuance of such an oral agreement of sale. He contended that since the plaintiff did not perform his part of the contract within the time fixed by him in the notice dated 28-12-1959 (Exhibit A-5), he sold the land to the 2nd defendant under Exhibit B-8. He finally contended that the plaintiff is not entitled to file the suit for specific performance or in the alternative claim relief for compensation or damages.

3. The 2nd defendant contended that the plaintiff was aware of his contract of sale dated 20-3-1959 settled through D. W. 2 K. Ramakrishnaraju, a close relation of the 1st defendant and when he gave a notice on 22-5-1959 (Exhibit A-2), the plaintiff did not give any reply till 2nd September, 1959.

4. Upon these pleadings, the trial Court framed appropriate issues and on appreciation of the evidence adduced by the parties held that the oral agreement of sale set up by the 2nd defendant is not true and that the plaintiff was not aware of the same. It was further found that the 2nd defendant is not a bona fide purchaser for value without notice and that he had notice of the agreement of sale in favour of the plaintiff executed by the 1st defendant. The agreement of sale relied upon by the plaintiff is true and genuine and is not collusive and is binding upon the 2nd defendant. It was further found that Exhibit A-5 dated 28-12-1959 does not make time the essence of the contract nor does it put an end to the contract. The trial Court, however, refused to grant the decree for specific performance on the ground that in spite of the notice (Exhibit A-5) plaintiff kept quiet for over 19 months without filing the suit and in the meanwhile allowed the 1st defendant to convey the property in favour of the 2nd defendant. After such a long lapse of time thought the trial court, it will not be just or equitable to disturb the rights of the 2nd defendant acquired under the sale deed (Exhibit B-8). The learned District Munsif thought that the appropriate relief in the circumstances would be the grant of a decree for the refund of the amount advanced by him together with damages. Consequently a decree for a sum of Rs. 1050 together with interest at the rate of 5 1/2 per cent per annum was granted against both the defendants.

5. Aggrieved with that decision, the plaintiff preferred an appeal to the Subordinate Judge of Eluru AS No. 65 of 1963. The learned Subordinate Judge agreeing with the conclusion of the trial Court that the agreement set by the plaintiff is true and genuine and not a collusive one held that the 2nd defendant is not a bona fide purchaser without notice. He concurred with the opinion of the trial Court that Exhibit A-5 neither makes, time an essential condition of contract nor does it determine the contract. He disagreed with the conclusion of the trial Court that this is not a fit case where relief of specific performance can be granted to the plaintiff. He thought that since the 2nd defendant was not a bona fide purchaser without notice and in view of the circumstances of the case the plaintiff is entitled to the relief of specific performance. He therefore allowed the appeal and granted a decree for specific performance in favour of the plaintiff against the defendants. It is this view of the learned Subordinate Judge that is now assailed in this second appeal.

6. The 1st defendant had filed cross-objections in the lower appellate Court but they were disallowed. The 1st defendant hat not filed any appeal or cross-objections in this Court. It is only the 2nd defendant, who had filed cross-objections in the lower appellate Court which were dismissed and against whom and the 1st defendant a decree of specific performance was granted, that has filed the present second appeal.

7. Three contentions are raised before me by Mr. C. Balaparameswari Rao, the learned counsel for the appellant 2nd defendant (1) Exhibit A-5 makes time the essence of contract and treats the contract as determined in case the plaintiff did not perform his part of the contract within the stipulated time; (2) that the plaintiff was not ready and willing to perform his part of the contract; and (3) the appellate Court should not have interfered in the exercise of the discretion by the trial Court in refusing a decree for specific performance.

8. In regard to the first contention, it cannot be in doubt that time can be made the essence of the contract by subsequent notice given by anyone of the parties to the contract, even though Section 55 of the Indian Contract Act does not provide for such a notice. It is of course necessary that if the notice wants time to be made essence of the contract it must expressly or by necessary implication say so. Any such notice ought to fix a reasonably long time requiring the other side to perform his part of the contract. The question whether the time prescribed in the notice is or is not of the essence of the contract would naturally depend upon the facts and circumstances of each case. The mere fact that the notice gave a certain time to perform the contract would not necessarily lead to the conclusion that the time prescribed was the essence of the contract. In all such cases, the Court has to look to the pith and substance of the notice and not at the letter of the notice and decide as to whether time was or was not essential to the subsistence of the contract. The real intention of the party who gives notice must be clear from the notice itself. It may in certain cases be necessary to rely upon surrounding circumstances. Nevertheless one has to largely look to the notice itself.

9. Viewed in this light, it cannot be said that Exhibit A-5 makes time as essence of the contract. It is no doubt true that the notice states that in case of default on the part of the plaintiff, the 1st defendant will sell the property to others. But this threat given in the notice cannot necessarily mean that the 1st defendant intended to expressly make time the essence of contract, nor can it be so inferred by necessary implication. It should be borne in mind that Exhibit A-1, the original agreement, does not make time the essence of the contract. On the other hand, although it fixes a time for performance, it prescribes that in case of default by the plaintiff he shall be liable to pay interest on the unpaid purchase money. The same payment of interest in case of default is made in Exhibit A-5. It can only mean that the 1st defendant, wanted to claim interest as per the original agreement in spite of the extended time. In other words, although he fixed a time for performance, he had no intention to make time the essence of contract. He could have otherwise in case of default, in spite of fixation of time, provided for avoiding the contract altogether as he would have been entitled to do. The fact that he did not expressly determine the contract under Exhibit A-5 lends further support to the conclusion that he did not intend to make time as essence of the contract. I find it difficult to accept the contention that since the 1st defendant stated that he will sell the property to others. I should hold that on expiry of 15 days prescribed by the 1st defendant for the performance of the contract by the plaintiff and in case the contract remained unfulfilled, it would be deemed to lave been put an end to. It is unnecessary to say that a contract has to be rescinded by express or unambiguous language. According to Section 55 of the Contract Act, it is no doubt true that in case the 1st defendant makes time the essence of contract and if the contract if not performed by the other side, the contract becomes voidable. It must however be remembered that the only right which the 1st defendant gets in such a case is to avoid the contract. The contract does not automatically get determined. He has to further expressly or in unambiguous words determine the contract under Section 64 of the Contract Act. It is not in dispute that subsequent to Exhibit A-5, the 1st defendant did not issue any notice cancelling the contract. His previous as well as subsequent conduct brings out prominently the fact that he had never any Intention to make time the essence of contract. The irresistible conclusion therefore is that Exhibit A-5 neither makes time the essence of contract nor does it conditionally or otherwise put an end to the contact. The assertion that he will sell the property to others need not necessarily in all cases mean that he wanted to put an end to the contract. If the contract is kept alive and he sells the property to others, he does it at his risk and at the risk of the purchaser who was put on notice. It is not possible therefore to hold because of the threat given in the notice that the property will be sold to others that the 1st defendant had put an end to the contract which he had entered into with the plaintiff. The lower Courts therefore, in my view, were right in holding that Exhibit A-5 cannot be said to have made time the essence of the contract or that the contract Exhibit A-1 was determined by the 1st defendant.

10. The second contention that the plaintiff has never been ready and willing to perform his part of the contract has very little substance It is true that the pleadings have made averments to the effect that while the plaintiff stated that he has been ready and willing to perform his part of the contract it was denied by the 1st defendant. There was no issue framed by the trial Court in that behalf. No attempt at any time was made by anyone of the parties to get such an issue framed. It is obvious that the parties did not lead any evidence on that question. The trial Court also did not consider or decide this question. It is only at the appellate stage that the question came to be considered by a sidewing. The lower appellate Court found that the plaintiff has always been ready and willing to perform his part of the contract. That being a question of fact, in the circumstances mentioned, it is not possible for this Court to disagree with the contention of the lower appellate Court.

11. It was finally contended that it was wrong for the lower appellate court to have interfered in the exercise of the discretion by the trial Court. Now the law in regard to the exercise of discretion is fairly settled. The relief of specific performance cannot he claimed as a matter of right nor it is granted as a matter of course. It is an equitable relief, the grant of which lies entirely in the discretion of the court. It must however be remembered that the discretion has to be exercised judicially and in accordance with the principles laid down in that behalf. See Satyanarayana v. Yelloji Rao, : [1965]2SCR221 and Hutchiraju v. Ranga Satyanarayana, AIR 1967 Andh Pra 69.

12. The trial Court refused to exercise the discretion in favour of the plaintiff merely on the ground that the plaintiff after receiving Exhibit A-5 kept quiet for over 19 months without filing the suit and mean-while allowed the 1st defendant to convey the property to the 2nd defendant. The lower appellate Court did not accept this approach as correct and I think the lower appellate Court was correct in reaching that conclusion. It is now fairly settled that mere delay does not deprive a plaintiff of the equitable relief unless coupled with it there are supervening circumstances which alter the situation and create right, title or interest in third parties validly. In this case, it is true that Exhibit A-5 was sent in reply to Exhibit B-4 Exhibit B-4 categorically states that the plaintiff has been ready and willing to perform his part of the contract. He asked the 1st defendant to receive the balance of the purchase money and execute the sale deed. It is no doubt true that the plaintiff falsely alleged that he had paid Rs. 400. Both the Courts below have found that the plaintiff has not paid that amount to the 1st defendant. In reply to this notice. Exhibit A-5 also indulges in some falsehoods. The 1st defendant set up a plea that he had not received Rs. 750 but received only Rs. 50 by way of advance. This plea was found to be false, by both the Courts below. His demand therefore that the plaintiff should pay Rs. 2400 within 15 days and get the sale deed executed was obviously untenable and a wrong demand, the compliance of which was not obligatory on the part of the plaintiff. It may be that plaintiff has not paid the taxes which condition of the agreement is not of much substance as the said amount could have been recovered by the authorities concerned in pursuance of the contract only from the plaintiff and not from the 1st defendant. When both the Courts below have found that the 2nd defendant was not a bona fide purchaser without notice and was aware of all the facts of the case, it was not possible to exercise the discretion in favour of such a person. The intervening interest which was brought into existence was deliberate and knowing fully this there exists an agreement in favour of the plaintiff which was not determined and that the contract was alive. Merely because there is a sale deed in favour of the 2nd defendant, which purchase, was made with full knowledge of the existence of the live contract with the plaintiff, it cannot be said to be a circumstance which would weigh against the plaintiff. In all cases of sale of immovable property, the Courts are usually inclined to grant equitable relief to the plaintiff if it is found that he is entitled to it. In this case, the only ground assigned by the trial Court was that there has been delay and that an intervening interest of third party has come into existence. Mere delay, as stated earlier, cannot be a ground, and I have also found that the 2nd defendant not being a bona fide purchaser without notice, cannot persuade the Court to refuse to exercise the discretion in favour of the plaintiff. I do not therefore consider that the trial Court was right in exercising the discretion in favour of the 2nd defendant. The exercise of the discretion was patently wrong because although it had held earlier that the 2nd defendant is not a bona fide purchaser without notice, it forgot that important factor to be considered at the time of the exercise of that discretion. It cannot be doubted that it is an important and relevant factor which goes a long way in exercising the discretion one way or the other. The lower appellate Court, in my view, has given ample reasons for reaching the conclusion that this is a fit case in which the plaintiff should get the equitable relief of specific performance in spite of some delay on his part.

13. For the aforesaid reasons, I do not find any valid reason to interfere with the conclusion of the lower appellate Court. The second appeal fails and is dismissed with costs.

14. No leave.


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