1. The plaintiff in O.S. No. 53 of 1968 on the file of the Court of the District Judge, East Godavari a suit for specific performance which was dismissed is the appellant herein.
2. Under an agreement dated 5-10-1966 the 1st respondent herein agreed to sell the appellant herein certain premises in which a High School and an Elementary School were being run for a sum of Rs.48,000. On the date of the agreement an advance of Rs.5,000 was paid. The agreement recited that the sale was being effected for the purpose of discharging the debts incurred by the 1st respondent. The purchase was asked to discharge a mortgage debt of Rs. 12,000 owing to one Merapala Rama Rao, and the purchaser should also discharge sundry debts owing to several creditors. After discharging those debts, the balance amount of sale consideration shall be paid to the vendor at the time of the registration of the sale deed. The site together with sheds and the High School known as Bharatiya Evangilical Mission High School together with the right of management thereof was delivered possession of to the purchaser on the date of the agreement. It was however, provided that the Elementary School should continue to be run by the vendor under his own management and he would vacate the same after the period of two years and shift the school to some other place. In regard to the High School, one Prasada Raju, who was working as the Correspondent of the School, should transfer the correspondentship in favour of the purchaser and the purchaser alone should manage all the responsibilities of the school from that day. It was also agreed that a regular sale deed shall be executed and registered within 2 months from the date of the agreement i.e. on or before 5-12-1966. If the purchaser failed to get the sale deed registered, he would be liable for the debts of the vendor together with interest. He would further have to forego the advance paid by him. On the other hand, if the vendor failed to carry out his part of the contract he was bound to return the advance amount of Rs. 5,000 and further to pay a sum of Rs.5,000 as compensation for the loss incurred by the purchaser. The case of the plaintiff was that he sent a sum of Rs. 7,000 at the end of October 1966 through one Angeswara Rao for discharging some of the sundry debts, but the 1st defendant evaded bringing his creditors. The 1st defendant was also requested to give a list of the creditors, but he evaded and dragged on the matter. On the other hand though on the date of the agreement the 1st defendant addressed a letter to the Educational Authorities to transfer the management of the High School to the plaintiff, later the 1st defendant changed his mind and addressed another letter in the last week of November, 1966 not to transfer the management to the plaintiff. At the same time he wrote to the plaintiff to cancel the agreement. Though initially the plaintiff replied that he would consider he however, positively informed the 1st defendant through mediators that the 1st has to perform the agreement. The plaintiff has always been ready and willing to perform his part of the contract but he came to know in or about the 1st week of February 1968 that the 1st defendant has executed an agreement of sale in favour of the 2nd defendant. He immediately got issued a registered notice to the 1st defendant and sent a copy to the second defendant demanding the 1st defendant to execute the sale deed according to the agreement in favour of the 2nd defendant. The 1st defendant gave a reply with false and untenable allegations. Thereafter he executed the sale deed dated 20-4-1968 in favour of the second defendant. The 2nd defendant was throughout aware of the prior agreement in favour of the plaintiff and was not therefore bona fide purchaser for the value without notice of the agreement. The plaintiff therefore filed the suit for specific performance of the agreement of sale in his favour. Subsequently the 1st and the 4th defendants were added as parties, as it was stated that a portion of the property had been gifted by the 2nd defendant to the 3rd defendant and the 2nd defendant had also mortgaged the suit property to the 4th defendant on 22-4-1968.
3. The 1st defendant denied that he plaintiff had ever performed his part of the contract viz., discharging debts owing to the several creditors and that he was also not ready and willing to do so. Time was of the essence of the contract and the plaintiff had to discharge his debts before 5-12-1966. The 1st defendant caused a notice to be issued to the plaintiff on 17-7-1967 demanding the plaintiff to pay the balance of the sale consideration and get the sale deed executed and registered within 15 days and in case of default, he stated that the agreement of sale would stand cancelled and that he would sell way the property to others. The 1st defendant also contended that the plaintiff knew about the contents of the notice but he wilfully refused to receive it. In fact the 1st defendant informed the plaintiff about the said cancellation through mediators. As the plaintiff did not perform his part of the contract even in spite of the notice the 1st defendant was entitled to sell away the property to the 2nd defendant.
4. The learned District Judge framed the necessary issues. After considering the oral and documentary evidence he held that time was not at all essence of the contract under Ed. A-1 the agreement. He held that the plaintiff failed to discharge the debts of the 1st defendant before 5-12-1966 as stipulated in the agreement; but as the time was not of the essence of the contract, the plaintiff could not be said to have committed the breach of contract by not discharging the debts within that date. He also held that the 1st defendant had repudiated the contract by writing to the plaintiff on 25-11-1966 that he was not willing to sell the property. He, however held that the repudiation by the 1st defendant does not absolve the plaintiff from his duty of carrying out his part of the contract under the agreement. Though the plaintiff was financially sound and had the means to raise the resources to meet his obligations under the contract under the contract, he did not show any readiness and willingness to discharge the debts due to by the 1st defendant although the discharge of such debts was an essential term under the agreement. He further held that the sale in favour of the 2nd defendant was supported by consideration. In the result he dismissed the plaintiff's suit with costs of the 1st defendant (one set).
5. The plaintiff has preferred this appeal against the suit judgment and decree of the learned District Judge. In order to appreciate the submissions made by the appellant in this appeal, it is necessary briefly to set out the events that happened from the date of the agreement till the filing of the suit by the plaintiff. As has already been observed, the agreement, Ex. A-1 was entered into on 5-10-1966. On that day itself the 1st defendant wrote to the District Educational Officer stating that the management of the B.E.M. High School has been transferred in favour of the plaintiff and that the plaintiff will at as Manager and Correspondent of the High School with effect from 5-10-1966 (Vide Ex. A-2). But within a few days thereafter i.e. on 25-11-1966, he wrote again to the District Educational Officer under Ex. A-4 that at the desire of well-wishers he has decided to continue to work as the Manager. He therefore requested the District Educational Officer to invalidate the proposals made earlier on the 5th instant for the transfer of the management and the correspondentship in favour of the plaintiff and to accord approval for the continuance of himself as the Manager and Sri Prasada Raju as the Correspondent. This was followed by a letter dated 26-11-1966, Ex. A-3 addressed to the plaintiff in which he stated as follows:
'I regret to inform you that I could not sell to you as per the agreement executed by me on 5-10-1966 in your favour for purpose of selling the land, relating to the Helen Clarke Childrens Home, Rajamundry, the building etc., therein, the High School pertaining thereto and the transfer of its management and correspondentship. Hence it is not possible to sell the above land as per the agreement executed in your favour by me and that the said High School was established for the children of Ashram and other poor students. Therefore I regret to inform you that we will run the same for the education of our children and that its management and correspondentship shall not be transferred to you.
Therefore I request you to excuse me taking pity on the poor children and request you to cancel the agreement. Further I am hereby informing you that I shall pay to you the amount in full due to you as per the agreement.
I request you to please come early and settle this matter.'
6. By Ex. A-9 dated 28-11-1966 he reiterated his decision and asked the plaintiff to come to a peaceful settlement. The plaintiff replied by Ex. B-2 the letter dated 5-12-1966 stating :
'Having once entered into litigation I am to let you know my regret for the frequent charges.'
'We shall consult with our concerning people, think over the matter and let you know. Meanwhile, I hope that you too shall think over the matter well and come to a decision. '
7. The 1st defendant replied by a letter, Ex. A-8 dated 7-12-1966 that what he had written to the plaintiff was his final decision and there was no need for him to go back on his word. He once again requested the plaintiff to cancel the agreement executed by the 1st defendant in favour of the plaintiff. He added the plaintiff to come immediately and settle the matter. On 16-5-1967 the plaintiff wrote to the 1st defendant in which he said that if it was convenient for him to give the plaintiff a chance he would complete the affairs soon. It is the case of the 1st defendant that a notice was got issued by him though his advocate to the plaintiff on 17-7-1967, which is marked as Ex. B-1 in the case. In that notice it was stated that the plaintiff had agreed to pay for discharging the debts of the 1st defendant a sum of the agreement and Rs. 10,000 within 15 days thereof and the balance by 5-12-1966 by which date the plaintiff agreed to get the sale deed executed and registered. But in spite of repeated demands the plaintiff did not pay the balance of consideration and got the sale deed executed and registered. It was also stated that on 18-4-1967 the 1st defendant had sent a letter through one G.S. Samuel calling upon the plaintiff to pay the balance of the consideration but the plaintiff did not comply with the 1st defendant's demands nor did he send any reply. Subsequently again the 1st defendant demanded the plaintiff to pay the balance, but without any effect in the circumstances it was stated that the 1st defendant was entitled to cancel the agreement and to deal with the property as he liked. The plaintiff was called upon to pay the balance of consideration viz.. Rs. 43,000 within 15 days from the date of receipt of the notice and get the sale deed executed ; failing which the fist defendant would sell away the property and recover any loss which he may sustain. It was also stated that on account of the breach of the agreement committed by the plaintiff, the plaintiff had forfeited his right to the sum of Rs. 5,000 paid by him by way of advance. It was also mentioned that the plaintiff had unlawfully dismantled two sheds worth about Rs.4,000 each and plaintiff was liable to pay Rs. 8,000, being the value of the materials removed. This notice was returned with a postal endorsement as refused by the plaintiff. The case of the plaintiff is that the endorsement is not true and he was not aware of any such notice. The 1st defendant entered into an agreement for sale Ex. B-6 dated 22-1-1968 in favour of the 2nd defendant whereby he agreed to sell the property for a sum of Rupees 50,000. On coming to know of this agreement the plaintiff got issued a notice through his advocate on 7-2-1968 in that notice it was stated that at the end of October, 1968 the plaintiff sent Rs.7,000 through Sri Agneswara Rao for the discharge of some sundry debts, but the 1st defendant evaded gathering his creditors. The 1st defendant was also requested to give a list of the creditors, but he evaded to do so. On the other hand on 26-11-1966 he wrote a letter repudiating the agreement. The plaintiff was always ready with the money and was willing to perform his part of the contract. The 1st defendant had no authority therefore to sell the property and to enter into an agreement of sale in favour of the 2nd defendant. The plaintiff called upon the 1st defendant to give list of debts with all necessary particulars and see that the creditors received the payments. It was also stated that the 1st defendant should have the agreement of sale in favour of the 2nd defendant cancelled. The 1st defendant sent a reply to this notice through his lawyer stating that the plaintiff had committed breach of contract by no discharging the debts within the time stipulated under the agreement and in these circumstances he was entitled to deal with the property and to sell the same to the 2nd defendant. Thereafter the 1st defendant executed the sale deed dated 20-4-1968 (Ex. B-10) in favour of the second defendant. It was contended by the 1st defendant that time was of the essence of the debts on or before 5-12-1966 and he failed to do so, the plaintiff did not perform his part of the contract and was therefore, not entitled to seek specific performance of the contract. The Court below held that in the circumstances of the case time was not of the essence of the contract. We are inclined to agree with this finding. It is settled law that in respect of a contract of sale of land, time is not usually of the essence of the contract unless it is expressly stated to be of the essence of the contract. In Ex. A-1 it is not stated in express terms that time should be of the essence of the contract. Further, there are no other circumstances indicating that it was intended that time should be of the essence of the contract. The learned counsel for the respondents could not seriously question this finding.
8. Even so, the Court below dismissed the suit for specific performance on the ground that the plaintiff was never ready and willing to perform his part of the contract, viz., to discharge the debts which had been incurred by the 1st defendant. It no doubt, held that the plaintiff had the sufficient means to raise the funds for the purpose of discharging the debts, accepting the plaintiff's evidence that he was a man of property and was the owner of several houses and lands. This latter finding also has not been seriously challenged by the learned counsel for the respondents. But it is submitted that the court below was not right on coming to the conclusion that the plaintiff was never ready and willing to perform his part of the contract. The learned counsel for the appellant also contended that as the 1st defendant had repudiated the contract even by the end of November, 1966 it was not necessary for the plaintiff to prove that he was ready and willing to perform his part of the contract. It is, no doubt, true that under Exs. A-3 and A-8, the defendant categorically stated that he was not willing to sell the property as per the terms of the agreement and, therefore, the 1st defendant repudiated the contract without any justification at that time. It is, therefore, argued on behalf o the appellant that he is absolved from the duty to perform his part of the contract. We cannot accept this contention. It is well settled that a plaintiff, who seeks specific performance must, in his turn, perform all the terms of the contract which he expressly or by implication ought to have performed at the date of the action. Where a condition or essential term ought to have been performed by the plaintiff at the date of the suit, the court does not accept his undertaking to perform in lieu of performance but will dismiss the claim. (Vide Halsbury's Laws of England. Third Edition, Vol. 36 at page 314). The learned counsel relied upon the decision in International Contracts ltd.,, v prasanta Kumar, : 3SCR579 wherein it was held that where the defendant completely repudiated his contract to reconvey the property under an agreement, no question of formal tender of the amount to be paid arises and the question to be decided is not whether any money was within the power of the seller but whether the purchaser definitely and unequivocally refused to carry out his part of the contract and intimated that money will be refused if tendered. Their Lordships of the Supreme Court referred to the decision in Hunter v. Daniel, (1845) 4 Hare 420, where Wigram, V.C. stated that the practice of the Courts is not to require a party to make formal tender where from the facts stated in the Bill or from the evidence it appears the tender would have been a mere form and that the part to whom it was made would have refused to accept the money. We do not read this decision as holding that wherever there is a repudiation of the contract, it is not necessary for the plaintiff to perform all the terms of the agreement which he has to perform before he can all upon the other party to perform his contract. All that this decision says is that as the contract itself has been repudiated, any tender of the purchase price would only be an empty formality, and, therefore, there was no need for the plaintiff to tender the amount, for it was clear that even if tended it would have been refused. On the other hand, the law on this subject has been clearly laid down by the Privy Council in Edridge v. R.D. Sethna, 60 Ind App 368 = (AIR 1933 PC 333) it was held in that case that,
'a wrongful repudiation of a contract by one of the parties does not enable the other party to sue to enforce the promise to him therein contained without having performed a reciprocal promise which by the contract, construed according to Section 52 of the Indian Contract Act, was to be performed before the promise which he seeks to enforce: it is not sufficient that the plaintiff was always ready and willing to perform the condition precedent, and the court cannot give him a decree subject to his doing so. The other party can treat the repudiation as determining the contract and claim damages under Section 53 of the Act if he does not take that course of repudiation does not affect the rights or liabilities of the parties.'
At page 375 of the Ind App = (at p. 236 of AIR) it was observed as follows :
'.............. if the other party still insists on performance of the contract the repudiation is what is called 'brutum fulmen' that is the parties are left with their rights and liabilities as before. A wrongful repudiation of a contract by one party does not itself absolve the other party if he sues on the contract from establishing his rights to recover by proving performance by him on conditions precedent. In the present case, the respondent, when he sued on the contract was still as much bound as ever to show that he had fulfilled all the conditions binding on his before he could exact performance from Tilden Smith.'
9. In this case, even tough the 1st defendant repudiated the contract by his letters Exs. A-3 and A-8 the plaintiff did not choose to accept the repudiation and sued for damages for breach of contract. On the other hand, he chose to treat the contract as subsisting and to enforce the contract. In the plaint itself it is stated that he positively informed the 1st defendant through mediators that the 1st defendant has to perform the agreement. According to him, he was in management of the High School ever since that date. Finally he filed a suit for specific performance of the contract instead of claiming damages. In those circumstances, it was obligatory on his part to perform that part of the contract which he had to perform before calling upon the 1st defendant to execute the sale deed. In this case, he had to discharge all the debts of the 1st defendant and he had to satisfy the court that he had performed his art of the contract or that he was effectively prevented by the 1st defendant from doing so even though he was ready and willing to perform the contract. We are not inclined to accept the contention that by reason of repudiation, the plaintiff was absolved from his duty of performing the contract.
10. Another decision that was relied on by the learned counsel for appellant in Sree Lal v. Hariram, AIR 1926 Cal 181 in which it was held that the plaintiff is absolved from showing that he is ready and willing to perform his part of the contract, if the defendant has repudiated the contract before the suit is brought. The learned Judges in this case relied on the ft observations in H.L. (E) British and Beaningtons Ltd., v. N.W. Cachar Tea Co., (1923 AC 48).
'Lord Abinger in De Medina v. Norman, (1842) 9 M &W; 820 lays down that the words 'readiness and willingness used in such a connection imply not only the disposition but the capacity to perform the contract, then says that when repudiation is accepted and acted upon by the seller, as it evidently was in this case, the seller is relieved from the performance of all conditions precedent, including the conditions of being ready and willing at the date of repudiation.
11. It is seen that the party is absolved from doing his part of the contract only if he accepts the repudiation and acts upon it. But when he does not choose to do so but treats the contract as subsisting he has to prove readiness and willingness on his part if he desires to enforce the performance of the contract by the other side. The unreported decision of this court in A.S. No. 314 of 1966 etc., dated 6-7-1970 (Andh Pra) where the case in Sree Lal v. Hariram, AIR 1926 Cal 181, was followed is a case of the purchaser not being ready and willing to deposit the sale price when there was repudiation by the seller by denying the truth of the contracts. As we have pointed out already the depositor offering to deposit the sale price in these circumstances would be an empty formality. If the decision in Sree Lal v. Hariram, AIR 1926 Cal 181 and the unreported decision in A.S. 314 of 1966 (Andh Pra) are understood to mean that part of his contract, i.e. even to carry out those terms which he has to carry out before calling upon the other person to perform his contract, even when he has not accepted the repudiation, they would be contrary to the decision of the Privy Council in Edridge v. R.D. Sethna, 60 Ind App 368 = (AIR 1933 PC 233).
12. In Sarat Kumar v. Madhusudan, : AIR1964Cal556 after referring to the decision in International Contractors Ltd., v. Prasanta Kumar : 3SCR579 (supra) it was observed that a party had two remedies open to him in the event of the other party refusing or omitting to perform his part of the bargain, he might either institute a suit in equity for specific performance or he might bring an action at law for the breach but that the plaintiff is not relieved on his part of the contract where the defendant has repudiated. The Supreme Court had nowhere stated in International Contractors Ltd, v. Prasanta Kumar (supra) that when the contract is repudiated by the vendor the purchaser is relieved of performance of the contract. The only question was whether in the circumstances of that case, actual tender of the purchase price was necessary; and it was held that it was not, as that would be a mere formality as it was bound to be refused. In view of the decision of the Privy Council in Edridge v. P.D. Sethna, 60 Ind App 368 = (AIR 1933 PC 233) we have no hesitation in holding that in this case notwithstanding the repudiation of the contract by the 1st defendant in Exs. A-3 and A-8, the plaintiff was still obliged to perform his part of the contract viz., to discharge the debts due by the 1st defendant to his creditors or show his readiness and willingness to perform the same.
13. It was then contended by the learned counsel for the appellant that in this case, there was sufficient evidence to show that the plaintiff was always eager and anxious to discharge the debts and but that he was not able to do so by the conduct of the 1st defendant. It was first stated that the defendant never gathered his creditors and made arrangements that they should receive the amounts paid by the plaintiff. It was also submitted that though the plaintiff was repeatedly asked for a list of the creditors the 1st defendant would not give to the plaintiff. On the other hand, the plaintiff sent Rs.7,000 through Sri Agneswara Rao. But the 1st defendant sent him away by saying that there was no need to pay the creditors at that moment that h would inform him later on. Regarding the plaintiff's case that a sum of Rs. 7,000 was sent at the end of October, 1966, the evidence is that of P.W. 3 Sappiti Venkanna and P.W. 4 Agneswara Rao. The evidence in this regard has been discussed by the Court below in detail in Paras 32 to 36 of the judgment and the court below held that it was not disposed to believe the story of the plaintiff and these witnesses that a sum of Rs. 7,000 was sent by the plaintiff to the 1st defendant in the lst week of October, 1966 and this was refused to be received by the lst defendant. It was stated by Agneswara Rao, that after the lst defendant refused to take the amount in October 1966, he kept the sum of Rs. 7,000 with him till 13-12-1966 when he deposited the same into his savings bank account with the Andhra Bank at Rajahmundry after paying a sum of Rs. 1,000 to the plaintiff's son, which was required for the repairs of the plaintiff's car. It is impossible to believe that P.W. 4 would have been allowed to retain a large sum of Rs. 6,000 with him instead of being asked to return the same to the plaintiff when the lst defendant refused to receive it. It is also significant that the deposit was not made in the name of the plaintiff it is further seen that the plaintiff did not issue any notice to the lst defendant immediately stating that he had sent a sum of Rs. 7,000 but he had improperly refused to receive the said sum. Even in the notice Ex. A-6 issued by the plaintiff on 7-2-1968 no reference is made to P.W. 3 who says that he accompanied Angeswara Rao when the sum of Rs. 7,000 was sent to the lst defendant. The truth or otherwise of the payment of Rs.7,000 rests upon the oral evidence of P.Ws. 3 and 4 and we are not inclined to act upon the evidence of these two witnesses and hold that such an amount was sent having regard to the circumstances stated above.
14. It was submitted on behalf of the plaintiff that the lst defendant did not give a list of creditors. The court below has accepted the evidence of the lst defendant that he gave such a list even on 5-10-1966 when the agreement was entered into. It was argued on behalf of the appellant that this statement is not worthy of acceptance as the case of the lst defendant in the notice Ex. B-1 is that the plaintiff was to pay the lst defendant Rs. 7,000 for discharging the debt within ten days and Rs. 10,000 within 15 days from the date of the agreement. Hence according to this notice plaintiff had to pay the sum of Rs. 7,000 and Rs.10,000 to the lst defendant. There was, therefore, no need for the lst defendant to furnish a list of creditors to the plaintiff as it was not understood that the plaintiff should himself discharge the debts directly. Even assuming that for this reason the evidence of the lst defendant that he gave a list of creditors on the 5th October, 1966 itself cannot be accepted as true, we do not see how that would make any difference in regard to the duty on the part of the plaintiff to discharge the debts. It was clearly stated in the agreement that the plaintiff should discharge the mortgage debts and other sundry debts. It was, therefore the plaintiff's duty either to have paid the amount to the lst defendant and asked him to discharge the debts or to have ascertained the names of the creditors for the lst defendant and discharge the debts himself. He has not chosen to do either. Even if the defendant did not furnish him a list of the creditors the plaintiff should have called upon him to furnish such a list or in the event of his refusing to do so, he should have tendered the money to the lst defendant so that the lst defendant may discharge the debts himself. But the plaintiff kept quiet for more than one year. If was only after the lst defendant entered into an agreement of sale in favour of the 2nd respondent that in his notice Ex. A-6 the plaintiff called upon the lst defendant to furnish a list of creditors. The lst defendant by his notice dated 17-7-1967 under Ex. B-1 had called upon the plaintiff to perform his part of the contract within fifteen days from the date of receipt of the notice. Even though time was not of the essence of the contract it was made the essence of the contract by the notice given by the lst defendant as the plaintiff had been guilty of default and of unreasonable delay in performing his part of the contract. The plaintiff did not discharge the debts within the fifteen days referred to in the notice. In order to get over this it is submitted on behalf of the plaintiff-appellant that the notice was not received by him and he was not aware of the contents of the notice. But the notice contains a postal endorsement that it was refused. The plaintiff belongs to Zinnur in West Godavari District whereas the lst defendant belongs to Rajamundry and it is not possible to accept the suggestion that the lst defendant got the endorsement manipulated with the connivance of the postal authorities. It is proper to presume that the endorsement of refusal is true and so the inference follows that the plaintiff out of ulterior motives, refused to receive the lst defendant's notice. It was also stated in the evidence of the lst defendant that he subsequently sent word through mediators about the contents of the notice, in spite of the notice the plaintiff failed to discharge the debts. The court below was therefore, right in holding that the plaintiff did not perform his part of the contract under Ex. A-1 and was not entitled to claim specific performance of the contract.
15. In the result, the appeal fails and is dismissed. As the lst defendant repudiated the contract in the first instance and also came up with the false case that possession was not delivered to the plaintiff even though the agreement expressly stated that possession was delivered to him. We consider that it is a fit case where the parties should be directed to bear their own costs.
16. Appeal dismissed.