1. This first appeal arises out of a suit for specific performance of the contract of sale, instituted by the plaintiff-respondent in the Court of the Third Additional District Judge, Bhopal. The suit was decreed and, therefore, the defendant has come up in this appeal.
2. The defendant contracted with the plaintiff to sell his house, situated in mohalla Nasarganj, Bhopal, the details whereof are fully given in. the plaint, for Rs. 23,000/- on 30-10-1953. Admittedly, out of (his amount, Rs. 15,5007- have been received by the defendant. Ex. P-l which records this transaction has been very informally and meagrely written. After mentioning the agreed price of sale and the portion paid, it only says that the plaintiff would call the defendant from his place of residence, Sironj, after Diwali, that is to say, after 6-11-1953, and after payment of the remaining amount, the defendant would execute the registered sale deed in favour of the plaintiff who is called 'Master Sahib'.
3. The plaintiff's case is that the defendant had promised to get the house in question redeemed from the mortgage of one Mulla Usuf Ali with whom it was mortgaged for Rs. 6,000/-. He did not do so, and there was litigation between the parties. The plaintiff broughtthe instant suit for specific performance after sending the notice (Ex. P-2) on '21-5-1956, calling upon the defendant to execute the conveyance of the property in his favour. The suit was filed on 28-10-1956.
4. The defendant resisted the suit on the following grounds in the lower Court and the same grounds have been reiterated before us:
(1) That the contract of sale made on 30-10-1953 was subsequently cancelled by the mutual agreement ofthe parties;
(2) That the plaintiff had given no evidence to Show that he was always ready and willing to perform his part of the contract and it was incumbent upon him to prove this fact;
(3) That there was inordinate delay and great laches on the part of the plaintiff which resulted in a complete change of circumstances. There was a great rise in price of houses at Bhopal on its being selected as the capital of the new State of Madhya Pradesh. The contract, therefore, could not be specifically enforced in favour of the plaintiff.
5. The lower Court found that the contract subsisted. It held that the defendant had undertaken to redeem the mortgage of Mulla Usuf Ali by paying him Rs. 6,000/- but that amount was not paid to him. Itfurther held that the possession of the house was given to the plaintiff by the defendant. It also found that the defendant got paid the amount of Rs. 754/4/- to Mulla Usuf Ali but with regard to the amount of Rs. 273/-of municipal taxes, it came to the conclusion that no satisfactory evidence of payment was adduced by the plaintiff. It also came to the conclusion that the plaintiff had been all the while willing to perform his part of the contract but the defendant failed to do so. It held that the contract was not cancelled in the first week of December 1953 as alleged by the defendant. On these conclusions, the trial Court decreed the suit for specific performance of the contract on the condition that the plaintiff paid in Court the amount of Rs. 6,7457127- for payment to the defendant.
6. Taking up the first question for consideration, it would be seen that the bargain was struck through one Fida Hussain, who was a common friend of the parties. The case of the defendant is that as the plaintiff failed to do anything up to 9-11-1953, Diwali being on 6-11-1953 he wrote a letter to Fida Hussain complaining ot the silence and inaction on the part of the plaintiff and desiring cancellation of the contract. It is stated that the said Fida Hussain by his reply (Ex. D-3) wrote back to the defendant on 16-11-1953 that the plaintiff had no objection to the cancellation of the contract provided the amount paid by him was returned to him. The defendant has urged that after receiving this letter, he wrote a letter (Ex. D4) on 5-12-1953 to the plaintiff in which the fact of cancellation of the souda was reiterated and it was stated by him that the defendant had sustained loss due to the breach of contract by the plaintiff and decision about it would be taken later on.
These letters (Exs. D-1, D-3 and D-4) constitute the main evidence that has been tendered oo behalf of the defendant to prove the alleged factifm of the cancellation of the contract. The plaintiff denies having received the letter, Ex. D-4. He has further stated that he never told Fida Hussain that he was agreeable to the cancellation of the contract. It has been also urged on behalf of the plaintiff that fida Hussain was not the right person to be approached if cancellation was desired. The defendant could write directly to the plaintiff and what ever was settled between them with regard to the cancellation could be easily recorded in writing. No such writing is there. In these circumstances, it was at first urged that Exs. D-1, D-3 and D4 were in fact never written at the time alleged and they constituted a mere concoction to suit the purpose of the defendant.
Having given our earnest attention to these letters and after reading the evidence of Fida Hussain (D. W. 2) and the line of cross-examination that was adopted on behalf of the plaintiff concerning these letters in which there is no suggestion to their having been cooked up for a purpose, we are of the view that it could not be seriously disputed that these letters were sent as alleged by the defendant. But, this in itself does not enable us to come to a conclusion that the plaintiff had accepted the cancellation of the contract. The important question that remains to be considered is as to whether Exs. D-1 and D-4 could legally have the effect of terminating the contract in a unilateral manner without giving a reasonable opportunity to the plaintiff to perform his part of the contract within a reasonable time. It is settled law that without giving a reasonable notice to the other party to complete the contract within a specified time, the contract could not be cancelled at the sweet will of one party.
7. In Jamshed v. Burjorji, AIR 1915 PC 83, their Lordships have observed :
'The special Jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really End in substance intended as regards the time of its performance, may be excluded by any plainly expressed stipulation. But such stipulation must show that the intention was to make the rights of the parties depend on the observance of the time limits prescribed in a fashion which is unmistakable.'
Further on, their Lordships have said:
'But equity will not assist where there has been undue delay on the part of one party to the contract, and the other has given him reasonable notice, that he must complete within a definite time. Nor will it exercise its jurisdiction when the character of the property or other circumstances would render such exercise likely to result in injustice.'
Later on, it was observed that:
'Applying these principles to the agreement before them, their Lordships are of opinion that there is nothing in its language or in the subject-matter to displace the presumption that for purposes of specific performance time was not of the essence of the bargain.
8. In Florrie Edridge v. Rustomji, AIR 1933 PC 233, their Lordships of the Privy Council observed as under:
'A wrongful repudiation by one party cannot, except by the election of the other party so to treat It, put an end to an obligation; 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 of itself absolve the other party if he sues on the contract from establishing his right to recover by proving performance by him of conditions precedent'
In a contract of sale of immoveable property, time would not be regarded as of essence unless it is shown that the parties intended that their right should depend upon the observance of time as the essence of contract. It is open to one of the parties to make time of the essence, of the contract by calling upon the other party who has been guilty of unreasonable delay to perform the contract within a stated time by giving him a reasonable notice. Vide Subayya v. Veeraya, (S) AIR 1957 Andh-Pra. 307.
9. We are unable to read anything in Ex. P-1 whicn makes time to be the essence of the contract. In Exs. D-1 and D-4, the defendant failed to prescribe any time within which the contract was to be completed by tile plaintiff. As a ma,tter of fact, all that is stated in Ex. P-1 is that the conveyance would be executed after Diwali, which is not sufficient to fix a dead line date for theexecution of the document but it only suggests that within a reasonable time after Diwali the sale-deed was to be obtained. In our view, therefore, the defendant had no valid, reason on 9-11-1953 and 5-12-1953 by writing the letters (Exs. D-1 and D-4) to say that he did not intend to perform his part of the contract and by hisunilateral communication to the plaintiff expressing his desire to terminate the contract, the contract cannot be inferred to have been terminated.
10. Apart from what we have said above, the circumstances of the case make it absolutely plain that thecontract was kept alive even beyond the month of December 1953. Shri Mohammad Umar (P. W. 3), who was the counsel for the defendant in the case instituted by the mortgagee Mulla Usuf Ali, has clearly in paragraph 1of his statement deposed that the plaintiff brought Rs. 600/- in December 1954 and Rs. 154/4/ in January 1955and paid those amounts to him at that time when the suit of Usuf AN on the basis of mortgage and rent waspending. He paid the said amount to Usuf AN and Usuf Ali made deductions of Rs. 726/- towards the rent relating to that suit and kept the remaining amount for the period after the suit was instituted. The suit relatedto this house. In his cross-examination, he has deposedthat before payment of the amount by the plaintiff, thedefendant's Mukhtyar Irfan Mohammad Khan came to him and told him that the plaintiff, Tufail Ahmed would come and pay the amount of rent. Tufail Ahmed had told him that he was paying money for the defendant. The defendant, Baduruddin as D. W. 1, has deposed in paragraph 5 'Of his statement that the. plaintiff had deposited municipal taxes of Rs. 273/- out of the rent of the house. If thecontract had not been subsisting after the month of December 1953; there was no necessity for the plaintiff ito have effected these payments concerning the housein question. The defendant had attempted to say that the payment of Rs. 754/4/ was made by him but theversion of the defendant appears to us to be completely untrue and in our view, he has been rightly disbelievedby the lower Court. There appears to be no reason why at all his counsel, Shri Mohammad Umar, (P. W. 3) would give a false version favouring the plaintiff on this point.
11. Another point leading to the same conclusion is that if the contract were cancelled as alleged, thedefendant would not have allowed the plaintiff to continue in possession up to 1956, when the suit was broughtand further the defendant would have definitely takensome steps to return the plaintiff's heavy amount thatwas with him.
12. It would further be seen that the defendant inparagraph 6 of his deposition has clearly admitted thatone of the tenants in the suit house was Mulla Shakir All,who is his Samdhi. Mulla Shakir Ali was also payingrent of the house to the plaintiff at least up to the year 1956 when the suit was brought. The defendant wanted to assert in the beginning that he had not delivered possession of the house in pursuance of the agreement of sale to the plaintiff and went on to say that the possession of the house was obtained forcibly. The learned trial Judge has properly remarked:
'It is, however, pertinent to note that the defendant did not take any legal action against the plaintiff for getting back the possession in spite of the alleged forcible occupation of the same by the plaintiff,'
13. For all these reasons, we hold that the agreement contained in Ex. P-1 was not cancelled as alleged by the defendant.
14. The next point that was urged is that the plaintiff has failed to prove that he was ready and willing to perform his part of the contract from the time of the agreement up to the institution of the suit; and, therefore, the relief of specific performance could not be granted to him. The appellant relied on some observations made in Alakhram v. Kulwantin Bai, AIR 1950 Nag 238. It would be seen that the plaintiff clearly averred in the plaint that he was ready and willing to perform hi? part of the contract. Before the institution of the suit, he made payment of the arrears cf rent and tax amounting to Rs. 754747- and Rs. 273/- on behalf of the defendant. These acts are only consistent with the intention of the plaintiff to fulfil his part of the contract. The defendant has failed to adduce any evidence showing that at any time the plaintiff was not willing or had refused to perform his part of the contract.
In (S) AIR 1957 Andh-Pra. 307 (supra), it has been observed that in a suit for specific performance of the contract of sale of land, it need not be stated in so many words that the plaintiff (purchaser) was continuously ready and willing to perform the contract. It is enough if it is made clear in the recitals in the plaint that he was so willing. In this connection the following observations made in Arjuna Mudaliar v. Lakshmi Ammal, AIR 1949 Mad 265, are pertinent:
'Undoubtedly in a suit for specific performance the plaintiff has to allege that he is ready and willing to perform his part of the contract,' x x x x x x x x x x
'. . . . . . . . .The averment that the plaintiff had noobjection to perform the contract in accordance with the decision of the Court was a sufficiant averment of his readiness and willingness to perform his part of the contract.'
In the case reported in Bank of India v. J.A.H. Chinoy, AIR 1950 PC 90, in the context of the plaintiff being ready and willing to perform his part of the contract though it was stated by plaintiff No. 1 that he was buying for himself and that he had no sufficient ready money to meet the price and that no arrangements had been made for finding it at the time of repudiation but when it was further made clear that he was in a jiosition to arrange the payment of requisite amount, it was observed by their Lordships:
'But in order to prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction. The question is one of fact and in the present case the appellate Court had ample material on which to found the view it reached.'
The lower Court considered the point in detail and advanced cogent reasons for its conclusions. We findnothing to differ from these conclusions. In the light of the observations made above, and considering the total lack in defence evidence challenging the readiness and willingness of the plaintiff to perform the contract, we are of the view that Alakhram's case, AIR 1950 Nag 238, (supra), has no application to the facts of the present case. The facts of that case are clearly distinguishable. This objection raised by the appellant has no merit and is, therefore, overruled.
15. Let us now consider the last question raised. It has been urged that the plaintiff is not entitled to the relief of specific performance on the ground of inordinate delay and laches. It plainly appears from the facts of the case that the contract was not abandoned at any time by the plaintiff nor did he ever make the defendant believe that he would not enforce it. It is also clear that the. defendant did not change his position by reason of any plea which could be said to have been introduced by the plaintiff. The rights of a third party have also not intervened. In these circumstances, the position seems to be wen settled that mere delay in the Institution of the suit cannot affect the plaintiff's rights. The delay to defeat the rigths of the plaintiff must be such that It may properly be inferred that the plaintiff had abandoned his right or on account of delay there must have, been such a change of circumstances that specific performance would prejudice the defendant.
16. We may usefully refer to the observations of Sir Barnes Peacock in Lindsay Petroleum Co. v. Hurd, (1874) 5 PC 221:
'It would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to 3 waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and, delay are most material.'
The learned counsel for the appellant relied upon the case of AIR 1950 Nag 238 (supra). This case, however, is not an authority for the proposition that the relief of specific performance if otherwise found to be suitable should be refused on the mere ground that the suit was instituted many months after the breach having been committed by the defendant. From long delay alone without anything further, an abandonment of rights cannot be Inferred.
17. In Surya Pakasarayudu v. Lakshminarsimha-charyulu, 26 Mad LJ 518 : (AIR 1914 Mad 462) the facts were that the agreement of sale was made on 4-11-1904. Time for performance fixed was of one month. Disputes between the parties arose shortly after the month of January 1905 as to the order in which reciprocal cbligations were to be performed. The suit was instituted more than two years after on 2-12-1907. The trial Court refused to grant a decree for specific performance as the plaintiff had brought his action long after repudiation by the defendant. The contract was taken to have been abandoned. The judgment of the trial Court was, however, reversed on appeal and It was hetd:-
'. . . as regards the finding of the Subordinate Judge that the laches itself amounts to a waiver or abandonment, I think it is an error of law to hold that mere delay amounts to a waiver or abandonment apart from other facts or circumstances or conduct of the plaintiff Indicating that the delay was due to waiver or abandonment of the contract on the plaintiff's part. In this case, there are no such circumstances proved.'
In Sankaralinga v. Ratnaswaml, AIR 1952 Mad 389 a Division Bench of the Madras High Court after reviewing various authorities observed :
'..... A contract which has been abandonee has no legal existence for any purpose and it cannot be the foundation for any relief whether it be specific performance or damages. The effect of waving a contract is not merely to bar any particular remedy under that contract but to extinguish it altogether and the right to any relief there under. The grant of relief to the plaintiff for return ot the advance and for damages is inconsistent with the theory that the contract had been waived or abandonee We are satisfied that In this case the plaintiff has not waived or abandoned his rights and that he is not disentitled to relief by reason of any laches or delay.'
18. On behalf of the appellant, reliance was placed on the case in Maharaj Bahadur v. Suresh, AIR 1921 Cal 179. A Division Bench of the Calcutta High Court observed therein in the context of this fact that after the contract of sate, the tenants on the property had agreed to raise the rants because they did not want the purchaser to become their landlord and the suit was brought not after the first refusal by the landlord but considerably afterwards; that there was a change in the value of the property and it had occurred by reason of the delay, which was attributable to the plaintiff. This case has no application to the facts of the present case. In the instant case, the rise in prices is not alleged to be due to inaction of the party but entire city of Bhopal is said to have gained in importance after the city was made the capital of the new State of Madhya Pradesh. In fact, the suit was brought before the formation of the State. There is no evidence in the case given by the defendant to establish that there was considerable rise in prices up to the time of the institution of the suit.
19. It has been observed in Jadu Nath v. Chandra Bhutan AIR 1932 Cal 493 that -
'The English Doctrine of delay and laches showing negligence in seeking relief in a Court of equity cannot bo imported into the Indian law in view of Article 113, Lim. Act, which fixes a period of three years within which a suit for specific performance should be brought. Except in mercantile and business contracts, time is not of the essence of the contract, but it may be material for the purpose of consideration whether in the circumstances of a particular case, specific performance should be granted. Though time not be essential, delay even within the time prescribed) by law will affect the remedy. Absence of proof of plaintiffs readiness and earnestness to perform his portion of the contract will entitle the Court to exerc'rse its discretion under Section 22, Specific Relief Act and refuse relief to the plaintiff which otherwise he would be entitled to secure. Mere delay is not a ground for refusing relief to in plaintiff if there has been no change in the status qua since the contract; but where the conduct of the plaintiff is such that though it does not amount to abandonment but shows waiver or acquiescence especially when inaction on his part induces the defendant to change his position, the plaintiff ought not to be allowed any relief'.
20. In Veettil Muhammad v. Abdarahiman Kutty, AIR 1953 Trav-Co. 429, it was observed that -
'Plaintiff's cause of action fw specific performance of a contract to sell immoveable property, (in this case, a house) arises only when he has notice that performance is refused by the defendant. Where, a suit for specificperformance is filed within three years from the date of the contract to sell, but within one year of the date thedefendant's refusal to execute the sale-deed, it cannot be said that there was inordinate delay on the part of the plaintiff in filing the suit.'
In the same case, it was further observed :
'Mere delay in filing the suit for specific performance is not mentioned in Section 22 as a ground for not decreeing specific performance. Where an agreement to sell property dees not fix any date for the performance, limitation commences to rim from the date when performance is demanded or refused and delay to institute a suit for specific performance under such circumstances is not fatal to the suit unless the delay has in any way prejudiced the defendant or a third party has acquired any interest in suit property after the date of the agreement and before the date of the filing of suit for specific performance, in such a circumstance, therefore, it will not be proper to presume 'from the mere delay in filing the suit that there has been a waiver or abandonment of right by the plaintiff'.
Further on, it was said :
'The fact that the price of the building, the subject matter of an agreement to sell it, has risen after the date of the contract and that the plaintiff will be getting an unfair advantage if specific performance is granted is not a consideration that should weigh with the court in deciding whether specific performance should be granted or not'.
We respectfully express our concurrence with the view taken in these cases.
21. A further point that has been raised is that as the price of the house in question shot up on the selection of Bhopal as the capital of the new State of Madhya Pradesh, it would not be the proper exercise of the discretion of the Court to enforce specific performance now. The important question to consider in this connection is whether the subsequent rise or fall in prices is a relevant consideration at all for judging the relief of specific performance. It may at the outset be pointed out that there is no clear plea In the written-statement raising this question nor is there any evidence given on behalf of the defendant to show as to what was the rise in prices of which he complains. Further, it would be seen that in the month of May 1956 when notice claiming specific performance of the contract was given, Bhopal had actually not become the capital; that event came into being a few months after.
But, our view is that the question of rise in prices at a point of time subsequent to the date of making of a contract is totally irrelevant and cannot furnish any basis for refusing the relief of specific performance. If the transaction was for proper consideration at the time it was entered into and the value of the property had considerably risen subsequently, that does not affect the enforceability of the contract. The validity of a transaction should on principle be Judged as on the date of the transaction. As remarked in Venkateswara Ayyar v. Raman Nambudiri, 19 Mad LT 329 : (AIR 1917 Mad 358), there is no justification in reason or in authority for the proposition that the liability of a Hindu coparcener as regards executed contracts, is different from the liability to execution contracts. What has been stated In that case with regard to the liability of a contract made by a Hindu coparcener applies fully well to an agreement for the sale of immoveable property when conveyance is to be granted in future.
This very point was fully discussed by their Lordships of the Madras High Court in AIR 1952 Mad 389 (supra)and after reviewing all the authorities in paragraphs 10 to 14 of the judgment, their Lordships came to the conclusion that regard must be had to the circumstances only as they stood at the time of the contract and if that is done, the subsequent rise in prices will not be a relevant ground for refusing the plaintiff specific performance. We respectfully agree with the view expressed in the cases mentioned above. We accordingly hold that subsequent rise in prices due to external factors would be absolutely irrelevant for consideration of the grant of relief of specific performance and the plaintiff's remedy of specific performance is not affected in the instant case by bringing his suit in the year 1956.
22. As a result of our findings, the appeal fails and is dismissed with costs.