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Pt. Krishna Chandra Sharma and ors. Vs. Pt. Ramgulam and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 25 of 1951
Judge
Reported inAIR1958MP295
ActsTransfer of Property Act, 1882 - Sections 58C; Contract Act, 1872 - Sections 55; Evidence Act, 1872 - Sections 92; General Clauses Act, 1897 - Sections 10
AppellantPt. Krishna Chandra Sharma and ors.
RespondentPt. Ramgulam and anr.
Appellant AdvocateR.S. Sharma and ;S.L. Jain, Advs.
Respondent AdvocateB.L. Seth and ;R.S. Dabir, Advs.
DispositionAppeal dismissed
Cases Referred(See Ram Kinkar v. Kamal Basini
Excerpt:
.....conviction of appellant is liable to be set aside. - (iii) that time was the essence of the contract and the plaintiffs could not claim a reconveyance after they failed to tender the amount before the stipulated date. rambilas, ilr (1947) nag 127: (air 1947 nag 208) (c), the law was laid down thus :in support of the contention that time was not of the essence of the contract reliance is placed on the privy council decision in ilr 40 bom 289: (air 1915 pc 83) (b). the cases however where there is an option of repurchase of immovable property once sold form an exception to this equitable rule, as has been noted in pollock and mulla's indian contract act, 7th edition, at page 302, and where a time limit has been laid down in the agreement of repurchase and where there is no question..........cases, the contract must be performed within the stipulated period.17. the reason for treating contracts of reconveyance of property on a different footing is obvious. in the case of such a contract, there, is no mutuality. the vendor is given a concession to purchase the property within a specific period, if he pays the necessary amount but there is no corresponding right in the vendee. the uncertainty in the title of the vendee which is introduced by the indulgence shown by him to the vendor must be set at rest after the stipulated period expires.18. we shall now dispose of the last point that has been urged on behalf of the appellants. it is stated that the stipulated period expired on 1st july, 1949 which was a bank holiday, and therefore, the contract could validly be performed.....
Judgment:

1. This appeal has been filed by the plaintiffs against the decision of the Civil Judge Class I, Sagar, in Civil Suit No. 13-A of 1950.

2. The plaintiffs had executed a sale-deed on 1st February, 1949 (Ex. P-5) in respect of their Malik Makbuza plot No. 46/1 situated at Khurai town for Rs. 7,262/8/- which consisted of Rs. 5,000/- paid on 1st February, 1949, Rs. 2,000/- paid on 4th February, 1949 and Rs. 262/8/- future interest for five months in advance. On the same date, the defendants executed an agreement (Ex. P-6) agreeing that 'they would reconvey the plot to the plaintiffs if an amount of Rs. 7275/'- was paid by them at any time up to 1st July, 1949. The plaintiffs stated that on 24th June, 1949, 29th June 3949 and 1st July, 1949, they offered to pay the defendants the agreed amount but the defendants put oil executing reconveyance on various excuses. On 2nd July, 1949, the defendant No. 1 met the plaintiff No. 1 in the Bar Library, at Khurai and promised to execute a sale-deed it the amount was produced in cash. When the amount was produced, the defendant No. 1 slipped away and avoided to execute a sale-deed. The plaintiffs had pleaded that the transaction amounted to a mortgage by conditional sale and although the period fixed for payment expired on 1st July, 1949 that day being a holiday, the amount could be paid on 2nd July, 1949. At any rate, the plaintiffs stated that time was not of the essence of the contract and, therefore, they could repay the amount with a reasonable time which they had always been prepared to do. They accordingly claimed to redeem the mortgage or in the alternative to enforce specific performance of the contract to reconvey the plot.

3. The defendants denied that the plaintiffs had made any offer to pay the sum in the last week of June or on 1st July, 1949 as alleged. They dented that any offer was made on 2nd July, 1949 in Khurai Bar Library. They pleaded that as the time fixed for the repayment had expired, the right o[ the plaintiffs to ask for reconveyance had lapsed.

4. The trial Court has found :

(i) that the alleged tender of the amount has not been proved as also the alleged agreement to accept the amount on 2-7-1949.

(ii) that the defendants did not avoid to exe cute a reconveyance as alleged.

(iii) that time was the essence of the contract and the plaintiffs could not claim a reconveyance after they failed to tender the amount before the stipulated date.

(iv) that the plaintiffs were not entitled to tender the amount of 2-7-1949 on the ground that 1-7-1949 was declared a holiday. On these findings, the trial could held that the plaintiffs were not entitled to specific performance and dismissed the suit. Hence this appeal.

5-7. The first point to be decided in this appeal is a question of fact viz. whether any tender or the amount was made by the plaintiffs on 24th June, 1949, 29th June, 1949, or 1st July, 1949. (After discussion of the evidence the judgment proceeds :) We have examined the evidence adduced carefully and find ourselves in full agreement with the conclusions reached by the trial Court. The probabilities as discussed in the judgment of the trial Court are that the plaintiffs never had the amount ready with them and the story about offering of the amount to the defendants on 29th June, 1949 and 1st July, 1949, is false.

8-11. Passing on to the incidents which happened, on 2nd of July, 1949 in the Bar room at Khurai, we have the evidence of Shri Ram Narain Lal (P. W. 9) Shri V. V. Sapro (P. W. 6), Shri S. P. Choubey (D. W. 4), Shri L. S. Khare (D. W. 1) and the plaintiff No. 1 himself. (After discussion of evidence of these witnesses the judgment proceeded : )

12. Considering the evidence on record, we are of the view, that the amount which was produced in the Bar-room that after-noon did not belong to the plaintiff and was not really meant for payment. We do not find it proved, that any offer was made by the defendant No. 1 to execute a deed of reconveyance if the amount was paid in the Bar-room as alleged. We are in full agreement with the findings of fact by the trial Court on these points.

13. We now pass on to the points of law-arising in this case. It has been conceded by the learned counsel for the appellants that in view of the proviso to Clause (c) of Section 58 of the Transfer of Property Act, the transaction cannot be regarded as a mortgage by conditional sale inasmuch as the sale and the conditions of reconveyance have not been embodied in the same document.

14. It has been strenuously argued by the learned counsel for the appellants that although the transaction does not amount to a mortgage by conditional sale, it must still be regarded as a lending and a borrowing transaction. He says that the property is worth Rs. 30,000/- and is being taken by the defendants for Rs. 7,000/- only. The trial Court has not allowed the evidence about the value of the property (vide ...... dated 13-3-50) as it considered this matter irrelevant.

In view of the specific provision under Section 58 of the T. P. Act, it is difficult to see how the plaintiffs can escape the conclusion that the transaction was not an out & out sale and contend that it was something between a mortgage and a sale. In Venkata Subbarao v. Veeraswami, AIR 1946 Mad 458 (A), it was contended that although the transaction which was incorporated separately in two documents could not be construed to be a mortgage by conditional sale, it could still be regarded as a mortgage falling under Section 58(g) of the T. P. Act. Repelling this argument, Patanjali Sastri, J. observed :

'The construction suggested would involve reading into the proviso words which are not there, and it would, moreover, stultify the new enactment as it would leave the previous state of the law practically unchanged. For it would not make much difference in the legal effect of a sale accompanied by a separate agreement for repurchase to provide that it shall not be deemed to be a mortgage by conditional sale but may be regarded as an anomalous mortgage. We do not think that the proviso was intended to have that effect. Its object evidently was to shut out an inquiry whether a sale with a stipulation for retransfer is a mortgage where the stipulation is not embodied in the same document.'

We have carefully considered the arguments advanced on behalf of the plaintiffs and, in our view, the plaintiffs are now precluded from showing that the transaction was not a sale.

15. The next question which arises for decision is whether the time was of the essence of the contract. The learned counsel for the appellant relied upon the following observations in Jamshed Khodaram Irani v. Burjorji Dhunjibhai, ILR 40 Bom 289: (AIR 1915 PC 83) (B) :

'Under that law equity, which governs the rights of the parties in the case of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended mere than that it should take place within a reasonable time,' This case has been specifically referred to in Shriram v. Rambilas, ILR (1947) Nag 127: (AIR 1947 Nag 208) (C), the law was laid down thus : 'In support of the contention that time was not of the essence of the contract reliance is placed on the Privy Council decision in ILR 40 Bom 289: (AIR 1915 PC 83) (B). The cases however where there is an option of repurchase of immovable property once sold form an exception to this equitable rule, as has been noted in Pollock and Mulla's Indian Contract Act, 7th edition, at page 302, and where a time limit has been laid down in the agreement of repurchase and where there is no question of mutual obligation the exceptional provision for the seller's benefit must be exercised strictly within the time prescribed'.

The following observations occurring in Shanmugam Pillai v. Annalakshmi, AIR 1950 FC 38 (D), further clarify the position :

'It is well settled that, when a person stipulates for a right in the nature of a concession or privilege on fulfilment of certain conditions, with a proviso that in case of default the stipulation should be void, the right cannot be enforced if the conditions are not fulfilled according to the terms of the contract. Such conditions though relating only to payment of money, are not regarded as a penalty and Courts of equity will not afford relief against a forfeiture for their breach.'

16. The law as it emerges on a consideration of the views as expressed in the cases cited above, is :

(i) that normally in the case of contracts to sell immovable property, time is not of the essence of the contract and specific performance can be compelled if a tender is made within a reasonable time.

(ii) the cases of agreements to reconvey, stand on a different fooling as they amount to concessions. In such cases, the contract must be performed within the stipulated period.

17. The reason for treating contracts of reconveyance of property on a different footing is obvious. In the case of such a contract, there, is no mutuality. The vendor is given a concession to purchase the property within a specific period, if he pays the necessary amount but there is no corresponding right in the vendee. The uncertainty in the title of the vendee which is introduced by the indulgence shown by him to the vendor must be set at rest after the stipulated period expires.

18. We shall now dispose of the last point that has been urged on behalf of the appellants. It is stated that the stipulated period expired on 1st July, 1949 which was a Bank holiday, and therefore, the contract could Validly be performed on 2nd July, 1949. The learned counsel for the appellant has relied upon Section 10 of the General Clauses Act to support this contention. It is argued that it was open to the plaintiffs to pay the amount privately to the defendants but they could also insist upon a registered deed of reconveyance at the time of payment. As the office of the Registrar was closed on 1st July, 1949, the contract could not be performed on that date. We do not see any substance in this argument. There was nothing to prevent the plaintiffs from completing the execution of the deed of reconveyance and it could have been registered later under the provisions of the Indian Registration Act. The provisions of Section 10 of the General Clauses Act would apply only to a case where the act itself is directed or allowed to be done or taken by an Act of the Parliament. Where the plaintiff has two courses open before him, one of paying the amount directly to the defendant and the other of depositing the amount in Court, he is not entitled to take advantage of Section 10 of the General Clauses Act, if the last date of the deposit happens to be a holiday (See Ram Kinkar v. Kamal Basini, AIR 1938 Pat 451 (E). In this view, we hold that the plaintiffs are not entitled to the benefit of the fact that 1st July, 1949 was a Bank holiday.

19. Accordingly, the appeal is hereby dismissed with costs.


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