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Kamal Rani Vs. Chand Rani and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtDelhi High Court
Decided On
Case NumberRegular First (OS) Appeal No. 15 of 1975
Judge
Reported inAIR1980Delhi188
ActsSpecific Relief Act, 1963 - Sections 16
AppellantKamal Rani
RespondentChand Rani and anr.
Advocates: S.L. Bhatia,; P.K. Seth and; D.K. Kapur, Advs
Cases ReferredEdridge v. R. D. SethJia
Excerpt:
specific relief act (1963) - section 16--readiness and willingness for performance of the contract to be judged by reading of the contract--readiness and willingness to perform the contract distinct form the essence of the contract.; the appellant and the respondents entered into an agreement dated august 26, 1976 (exhibit p.w. 8/28) whereby the appellant agreed to sell her house and property comprised of a free hold plot bearing no. 30 block k, green park, new delhi measuring 311 sq. yds. with a double storeyed residential house constructed thereon, along with fixtures and fitting for a sum of rs. 1,78,000 to the first respondent smt. chand rani. a sum of rs. 30,000 was paid at the time of the execution of the agreement. a further sum of rs. 98,000 was stipulated as payable of rs......prakash narain, j. (1) this appeal arises out of the judgment and decree of a learned single judge of this court sitting on the original side whereby a suit for specific performance of an agreement to sell immoveable property has been decreed. (2) the appellant and the respondents entered into an agreement dated august 26, 1976 (exhibit public witness 8/28) whereby the appellant agreed to sell her house and property comprised of a freehold plot bearing no. 30, block k, green park, new delhi, measuring 311 sq. yards with a double storeyed residential house constructed thereon along with fixtures and fitting for a sum of rs. 1,78,000 to the first respondent smt. chand rani. the second respondent shri niranjan nath, is the husband of the first respondent smt. chand rani. a sum of rs. 30,000.....
Judgment:

Prakash Narain, J.

(1) This appeal arises out of the judgment and decree of a learned Single Judge of this court sitting on the original side whereby a suit for specific performance of an agreement to sell immoveable property has been decreed.

(2) The appellant and the respondents entered into an agreement dated August 26, 1976 (Exhibit Public Witness 8/28) whereby the appellant agreed to sell her house and property comprised of a freehold plot bearing No. 30, Block K, Green Park, New Delhi, measuring 311 sq. yards with a double storeyed residential house constructed thereon along with fixtures and fitting for a sum of Rs. 1,78,000 to the first respondent Smt. Chand Rani. The second respondent Shri Niranjan Nath, is the husband of the first respondent Smt. Chand Rani. A sum of Rs. 30,000 was paid at the time of the execution of the agreement, Exhibit Public Witness 8/28. A further sum of Rs. 98,000 was stipulated as payable within 10 days of the execution of the said agreement and the balance of Rs. 50,000 was to be paid at the time of the registration of the sale-deed. It wa's agreed between the parties that the appellant would redeem the property by paying off a loan of Rs. 25,000 out of the 'sum of Rs. 30,000 paid at the time of the execution of the agreement. The property was mortgaged with the Life Insurance Corporation of India. The appellant was also to get the income-tax clearance certificate from the income-tax authorities. The sale-deed was to be executed on or before October 31, 1971. The first floor of the house was let out to tenants at the time of the execution of the agreement. It was stipulated by the said agreement that the appellant would hand over documents pertaining to the property in suit along with the vacant possession of the first floor by September 30, 1971 and possession of the front portion of the said property at the time of the registration of the sale-deed. The amount of Rs. 30,000 was to stand forfeited to the appellant if respondent No. 1 failed to pay the consideration and get the sale-deed registered within the agreed time.

(3) The respondents filed a suit for specific performance of. the said agreement on November 27, 1971. It was alleged that though the respondents called upon the appellant to complete the sale and though various letters and notices were issued to her she failed to fulfill her part of the bargain and in fact by a letter dated September 15, 1971 resoled from the contract on the plea that the first respondent had failed to pay the stipulated amount of Rs. 98.000 within 10 days of the execution of the foresaid agreement, i.e. by September 6, 1971 and, thereforee, the agreement stood anulled and the sum of Rs. 30,000.00 stood forfeited to the appellant. In reply to the said communication the first respondent wrote to the appellant calling upon her to execute the sale-deed in her favor offering to pay the remaining consideration at the time of the execution of sale-deed. As the appellant failed to comply with the said demand the suit for specific performance was filed claiming specific performance of the said agreement or in the alternative damages in the sum of Rs. 1,50,000 including refund of Rs. 30,000.

(4) The appellant in reply to the suit admitted the execution of the agreement dated August 26, 1971 and receipt by her of the sum of Rs. 30,000. She, however, maintained that payment of Rs. 98,000 within 10 days of the execution of the agreement. Exhibit Public Witness . 8128, was essence of the contract and inasmuch as that amount was not paid, she was entitled to treat the contract as having become null and void. She admitted that she was to take necessary steps for redemption of the property in suit and the documents were to be delivered by September 30, 1971 but maintained that all this was to be done only on payment of Rs. 98,000 within 10 days of the execution of the agreement. As far as possession was concerned, she stated that she was bound to give possession of the first floor at the time of the registration of the sale-deed. The first floor had been got vacated from the tena'nts by September 20, 1971. The front portion of the house was in her possession and delivery thereof could easily be made at the relevant time. She denied that the respondents ever tendered her the sum of Rs. 98,000. It was her contention that the second respondent wanted possession of the ground floor before payment of Rs. 98,000 and this demand being against the terms of the contract, she was not willing to accede to the demand. In consequence, she prayed that the suit be dismissed and it be held that the sum of Rs. 30,000 stood rightly forfeited to her.

(5) On the pleadings of the parties I he following issues were settled :

'1. Whether the plaintiff No. 1 was ready and willing to perform her part of the agreement O.P.P. 2. Whether it was of the essence of the contract that out of the balance amount of Rs. 1,48,000 the sum of Rs. 98,000 was to be paid within 10 days of the execution of the agreement If so, what is its effect O.P.D. 3. Whether the sum of Rs. 30,000 was paid as earnest money 4. To what relief the plaintiff is entitled to 5. Relief.'

(6) The learned Single Judge came to the conclusion on a reading of the agreement, Exhibit Public Witness 8/28, that payment of Rs. 98,000 by September 6, 1971 was not of the essence of the contract. He also came to the conclusion that the respondents were ready and willing to perform their part of the contract and it was the appellant who had resoled from the sale. In consequence, he decreed the suit.

(7) Before us two points have been urged. First, that the readiness and willingness of a party to perform his or her obligations under the contract is to be judged by a reading of the contract and has to be of the contract as entered into , and not of the contract terms whereof have been varied by the tender to suit her convenience. Secondly, readiness and willingness to perform the contract is distinct from, what may be called, essence of the contract. The contention was that the vendee was not ready and willing to perform the contract from the beginning and her readiness and willingness now or after September 30, 1971 is not relevant.

(8) The relevant clauses of the agreement, Exhibit Public Witness 8/28, which may be noticed are clauses 1, 2, 3, 5 and 6. Clause 1 of the agreement which mentions the payment of Rs. 98,000 reads as under:

'1. That in pursuance of the said agreement, the 1st party has received a sum of Rs. 30,000 (Rupees thirty thousand only) from the second party as earnest money the receipt whereof the 1st party hereby separately acknowledges. Rs. 98,000 (Rupees ninety eight thousand only) will be paid by the second party to the 1st party within a period of ten days only and the balance of Rs. 50,000 (Rupees fifty thousand only) at the time of registration of the sale deed before the Sub-Registrar, New Delhi.'

Clause 2 without any stipulation as to time, inter alia, provides that the vendor shall take necessary steps for immediate redemption of the property from the mortgage and inform the vendee in writing about the completion of the redemption. Clause 3 lays down that the vendor shall immediately apply for permission to sell to the income-tax authorities and after getting the permission to sell by getting an income-tax clearance certificate complete the sale in favor of the vendee or her nominee/nominees on or before October 31, 1971. Clause 5 reads as under :

'5. That if the second party fails to pay the balance sale consideration and get the sale deed executed a'nd registered within the specific period mentioned in para 3 above, the earnest money of Rs. 30,000 (Rupees thirty thousand only) shall stand forfeited to the 1st party and this agreement deemed null and void.'

Clause 6 reads as under :

'6. That the 1st patty shall pay all taxes, rates, municipal taxes up to the date of registration of the sale-deed and that the previous deeds and other documents pertaining to the said plot of 30, block 'K', sanctioned plan and completion certificate from the Municipal Corporation, Delhi in respect of the super-structure built on the said plot shall be handed over along with the vacant possession of first floor by 30-9-1971 and the front portion of the said property by the first party to the second party at the time of registration of the sale-deed.'

(9) Exhibit Public Witness 8/1 is a notice dated September 10, 1971 issued by the counsel of the first respondent pointing out to the appellant that under the agreement dated August 26, 1971 she was immediately to redeem the property by paying Rs. 25,000.00 to the life Insurance Corporation of India and inform the first respondent about completion of the redemption; she was to immediately apply to the income-tax authorities for grant of the income-tax clearance certificate and would execute the sale-deed on or before October 31, 1971; that the first respondent had been calling upon her to complete the sale in accordance with the agreement but. she had been avoiding to do so and had not even redeemed the property though the sum of Rs. 30.000.00 was paid on the clear understanding that it will be utilised for redemption of the property; that the first respondent was ready and willing to pay the purchase price and her broker had even approached the appellant but she had been avoiding to complete the sale; and that she should forthwith comply with the requirements of the said agreement dated August 26, 1971 within 2 days and complete the sale. This notice was served on the appellant on September 14, 1971 having been posted on September Ii, 1971 vide Exhibit Public Witness 8/2 and Exhibit Public Witness 8/3 respectively. Exhibit P. 3 is a telegram dated September 16, 1971 from the counsel of the first respondent to the appellant to the same effect. The notice sent on behlf of the first respondent crossed the notice dated September 13, 1971 issued by the counsel for the appellant, to the respondents. Copy of this notice is Exhibit D.W. 3/2. In this notice it was stated that as the respondents failed to pay the sum of Rs. 98,000.00 , as stipulated in the agreement dated August 26,1971, the appellant had forfeited unto herself the sum of Rs. 30,0001- and the agreement stood anulled. Exhibit Public Witness 8/4 is the carbon copy of the notice. Exhibit D.W. 3/2, received by the Advocate of the respondents. The respondents Advocate on their instructions replied to the notice of the appellant by a letter dated September 18, 1971, Exhibit Public Witness 8/5. He denied the allegations made in the appellant's notice and reiterated the earlier stand of his clients. Exhibit Public Witness 8/8 is a letter dated September 16, 1971 from the advocate of the appellant to the advocate of the respondents by way of reply to the telegram given on behalf of the respondents, referred to earlier. This also reiterates the earlier stand. Thus, the diverse stands taken by the parties really revolve round the payment of Rs. 98,000 .00 .

(10) D. R. Puri appeared as Public Witness 2. According to him though the respondents only wanted to pay Rs. 5,000.00 they had been prevailed to pay Rs. 30,0001- at the time of the execution of the agreement dated August 26, 1971 because the appellant had said that she wanted money to redeem the mortgage from L.I.C. After the execution of the agreement he accompanied the respondents when they visited the appellant on August 30, 1971. The respondents had asked the appellant and her husband whether the income-tax clearance certificate had been obtained and whether the property had been redeemed from the Life Insurance Corporation. At that time the respondents had carried three fixed deposit receipts and cheque book and some cash also, with them. They were willing to pay the balance of the sale price on the appellant obtaining the clearance certificate from the income-tax department and on their getting the property redeemed from the L.I.C. As the appellant wanted some more time to get the income-tax clearance certificate and redemption documents, they came back. He again accompanied the respondents when they visited the appellant on September 3 and September 10. The appellant and he' husband informed the respondents in his presence that some more time was required to get the income-tax clearance certificate and the redemption documents. The second respondent thereupon offered to help the appellant in this regard but was told that the appellant and her husband would manage it by themselves. According to this witness on September 3 the respondents were ready and willing to pay the balance of the sale price. On September 10, 1971 the appellant resoled from the contract and said that she had forfeited the deposit of Rs. 30,000.00 . In cross-examination he admitted that he did not know how much money the respondents had on September, 3 and September 10, 1971. The respondents were willing to pay the money by cheque and some money in cash. He was not aware of the terms of the agreement. He denied that the appellant and her husband said that they would get the income-tax clearance certificate and redemption documents by the end of September, 1971. M. M. Sharma, appearing as Public Witness 3, said that he was the husband of the sister of the first respondent. He stated that he and Mr. Puri had accompanied the respondents when they went to visit the appellant and her husband on September 10, 1971. According to him the respondents took money with them and tendered the same to the appellant but she declined to accept the same on the ground that she had forfeited the amount of Rs. 30,000.00 and the contract was at an end. In cross-examination he said that when the respondents asked the appellant whether she had got the property redeemed and obtained the income-tax clearance certificate her only answer was that she had forfeited Rs. 30,000.00 . The first respondent appeared as her own witness as Public Witness 7. She said that she was a resident of Kanpur. They had a chemichrome industry she was a Director of that company. About D. R. Puri she said that he was a friend of her husband and he had introduced them to a broker. According to her she had agreed to pay Rs. 5,000.00 as advance to the appellant but as she wanted Rs. 30,000.00 to clear her mortage debt to the Life Insurance Corporation she agreed to pay Rs. 30,000.00 . According to her the balance amount of the sale consideration was to be paid after the appellant had got the property redeemed from the Life Insurance Corporation and after she had obtained the income-tax clearance certificate. She said that she and her husband were visiting the appellant daily and asking her to complete the sale. On these visits they used to carry cash and cheque books and fixed deposit receipts. She said that she was always ready and willing to perform her part of the contract. Regarding the payment of Rs. 98,000.00 her statement was, 'The defendant asked us to pay Rs. 98,000.00 . We were willing to pay this amount provided possession of one room of the suit property was given to us. The defendant did not deliver the possession of the room to us and put us off by saying that the sale will be completed after original documents of title are returned to her by the Life Insurance Corporation.' She deposed that in September, 1971 the appellant declined to complete the sale and told her that the sum of Rs. 30,000.00 had been forfeited. On this she caused notices to be served on the appellant to complete the sale. She visited the appellant even after her refusal to complete the sale but without any success. She deposed in cross-examination that she did not know about the terms of the agreement of sale. She, however, admitted that the balance of Rs. 98,000.00 was to be paid within 10 days from the date of the agreement of sale. According to her she approached the appellant 2 days prior to the expiry of 10 days in the company of her husband and Mr. Puri and offered the amount of the balance consideration. What she says in this behalf is, 'we said to the defendant that she should accept the amount of Rs. 98,000.00 from us and should deliver to us vacant possession of one room......... According to the agreement possession of one room was to be delivered to us by the end of September, 1971. Possession of the remaining portion was to be given at the time of the execution of the sale- deed........... We demanded the vacant possession of one room which was in the possession of the defendant on the ground floor. I do not know what was the term as to delivery of possession in the agreement. The defendant asked me to pay the amount of Rs. 98,000.00 to her but she was not willing to deliver possession of one room. We then did not pay the amount to the defendant. I, thereforee fell ill and my husband used to go to the defendant............ The defendant was willing to give possession of a store. This was not acceptable to us since we wanted her to deliver possession of one room.' The second respondent appeared as Public Witness 8. He admitted signing the agreement dated August 26, 1971. About the payment of Rs. 98,000.00 he said, 'The defendant demand that we should pa' Rs. 98,000.00 more. We were willing to pay this amount provided the property is redeemed, the document of sale is ready for execution and the income-tax clearance certificate has been obtained. ......we went to the defendant on 30th of August, 1971. I, my wife and Mr. Puri went to the defendant. I asked the defendant to accept the amount of Rs. 98,000.00 . She was not willing to accept the same. She told us that she will first get the property redeemed and obtain the clearance certificate from the income-tax and then she will write to us...... Again I visited the defendant on 3rd September. 1971. My wife, Mr. Sharma and Mr. Puri accompanied me........ On 3rd September, 1971 also I offered the defendant to take Rs. 98,000.00 ...... We again went to the defendant on 10th September, 1971 two times, once in the morning, once in the evening...... The defendant has not told us till today whether she has got the property redeemed and whether she has obtained the income-tax clearance certificate.' In cross-examination this witness stated, 'Since the defendant had not obtained the income-tax clearance certificate we were not willing to pay the amount of Rs. 98.000.00 to her. According to her agreement it is true that Rs. 98,000.00 was to be paid within 10 days to the defendant whether the property is redeemed or the income-tax clearance certificate is obtained or not within that time. We, however, were not willing to pay the amount of Rs. 98.000.00 unless the property is redeemed and unless a certificate of income-tax clearance is obtained...... In the agreement of sale the defendant had promised to deliver possession and, thereforee, we asked for vacant possession. According to the agreement of sale, posession was to be delivered to us on 30th of September, 1971. We served a notice on the defendant dated 10th September, 1971 after our visit on that day to the defendant......On 3rd September, 1971 and 10th September, 1971 and also on other subsequent visits we have been demanding possession from the defendant. ....... I did not offer to pay Rs. 98.000.00 without the redemption of the property and the clearance certificate......... I did not tell the defendant that we will pay her the money without redemption and without the certificate.'

(11) The appellant also examined several witnesses. One of them was her husband, R.S. Bhardwaj, who appeared as D.W. 3. He deposed that at the time when the agreement, Exhibit Public Witness 8/28, was executed his wife, appellant, was a partner in motor parts business along with her cousins, which was being carried on at Ambala. The husband of the appellant's sister was doing business of motor parts at Poona along with some other persons. As that partnership was to be dissolved, Mr. Kailash Dutt, the sister's husband, was agreeable to take the appellant as partner in that business provided she invested Rs. I lakh in the business within a week. It was for this reason that he and the appellant agreed to sell the house in suit. They had earlier decided to wind up their business in Ambala which in fact they did on August 30, 1971. The house was agreed to be sold for Rs. l,78,00'0.00 and Rs. 30,000.00 was received at the time of the execution of the agreement of sale. Though the appellant had asked the respondents to pay another sum of Rs. 98,000/ within a week they had agreed to pay the same only within 10 days and that balance of the sale price was to be paid at the time of the registration of the sale- deed. According to the witness the payment of Rs. 98 000j- was to be made within 10 days and was the essence of the contract and that is why the word 'only' was introduced. The sum of Rs. 98,000.00 was not paid within 10 days as stipulated and so, Rs. 30,000.00 was forfeited and the agreement became inoperative. The house was mortgaged to L.I.C. and was to be redeemed by September 30, 1971. In order to reduce the property he wrote a letter dated August 28, 1971, Exhibit DW. 3/1. A reply was received from the L.I.C. stating what amount was remaining due from the loan. This letter is dated September 8, 1971, Exhibit D.W. 1/2. He denied that the respondents ever offered to pay Rs. 98,000.00 , as alleged or ever expressed their readiness and willingness to pay the said amount within 10 days of the agreement. With regard to possession he deposed that Mr. Nigam was occupying the first floor and as possession had to be handed over by September 30, 1971 Mr. Nigam vacated the said portion by September 20, 1971. That portion remained vacant for three to four months thereafter. He deposed that he along with his wife was living on the ground floor in the front portion while the back portion on the ground floor was occupied by one Mr. K. Ramanathan. So far as the portion on the ground floor was concerned possession of the same was to be given by October 31, 1971. He denied that Rs. 30,000.00 was paid at the time of the execution of the agreement to enable the appellant to pay off the loan to the L.I.C. and redeem the property. He also denied that there was any condition that Rs. 98,000.00 was to be paid only after obtaining of the income-tax clearance certificate and redemption documents from the L.I.C. He said that though the L.I.C. wrote to him vide Exhibit D.W. 1/2 on September 8, 1971, he did not consider it necessary to inform the respondents about it as by that time they had already committed breach, of the contract. He denied that the respondents ever met him as alleged on September 3, 1971 or earlier. According to him the respondents only came on September 9 or September 10. 1971 by which time the period of 10 days to pay Rs. 98,000.00 had already expired. He maintained that income-tax clearance certificate and redemption documents were to be obtained by September 30. 1971. Regarding partnership of Kailash Dutt in Poona, although he had earlier stated that it was dissolved on September 30, 1971, he later clarified that it was dissolved on August 31, 1971, Banarsi Dass, Broker, appeared as D.W. 4. He deposed that Rs. 30,000.00 was paid by way of earnest money. Rs. 98,000.00 was to be paid within 10 days and the balance of the sale consideration at the time of the registration of the sale-deed. According to him there was no special reason why Rs. 98,000.00 had to be paid within 10 days. He maintained that there was no time limit to redeem the property from L.I.C. excepting that it had to be redeemed prior to the registration of the sale-deed. He claimed to be a draftsman of the agreement, Exhibit Public Witness 8/28. In cross-examination he admitted that payment of Rs. 30,000.00 at the time of the execution was necessary because Rs. 25,000.00 had to be paid to L.I.C. According to him the respondents never met him after execution of Exhibit Public Witness 8/28 prior to, September 8 or September 10, 1971. According to him the word 'only' had been written to qualify the amount, in the first part of the clause and the word 'only' was written in the second part of the clause 'so that there may not be misunderstanding that Rs. 98,000.00 had to be paid within 10 days.' According to him the second respondent had ring him up from Kanpur and asked him whether there would be any objection to payment of Rs. 98,000.00 one or two days later as he was busy and held up in Kanpur. He assured the second respondent that the appellant would not be too particular about that. He further admitted that he gave this assurance without talking to the appellant. On September 8 or September 10, 1971 the respondents came and said that they were willing to pay Rs. 98,000.00 and the appellant was also willing to accept it but the difficulty was that the respondents were willing to give the money if they were given possession of at least one room on the ground floor whereas the appellant was willing to give possession of one store only and not a room. The appellant appeared in the witness box as D.W. 5. She reiterated what her husband had deposed as to the purpose of selling the house and having a clause inserted regarding payment of Rs. 98,000.00 . She admitted that Rs. 25,000.00 had to be paid to the L.I.C. to clear the loan. She asserted that the respondents never came to tender Rs. 98,000.00 within 10 days of the agreement. They never came till on or about September 9 or September 10, 1971. With regard to the controversy about giving possession of one room she said that even on September 9 or September 10, 1971 the respondents insisted on possession of a room while she was willing to give possession only of a store as accommodation with her was insufficient. Possession of the first floor was to be given by September 30, 1971 and of the rest by October 31, 1971. She supported what her husband had said about her business interest and the intension to invest the money in the Poona business.

(12) The second respondent Niranjan Nath, appeared as Public Witness 8, once again in rebuttal. At this time he admitted that his wife had asked the appellant to give possession of at least one room but did not remember on what date this conversation took place. He also admitted that the appellant was willing to offer some place underneath the stairs for keeping the luggage which was not acceptable. He further deposed that the appellant was not willing to give one room as he was unwilling to accept the place under the stair-case.

(13) The principles on which specific performance of a contract of sale of immoveable property should be granted or should not be granted are well-settled. Section 16 of the Specific Relief Act, 1963 reads as under :

'16. Personal bars to relief. Specific performance of a contract cannot be enforced in favor of a person (a) who would not be entitled to recover compensation for its breach; or (b) who has become incapable of performing or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or willfully acts at variance, with, or in subversion of, the relation intended to be established by the contract, or (c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant. Explanationn For the purposes of clause (c), (i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the Court; (ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.'

What we have to see is whether any of the parties have committed a breach of agreement, Exhibit P. W. 8/28, and what is its true construction. According to the learned Single Judge though payment of Rs. 98,000.00 was stipulated to be made within 10 days there was no specific agreement that the said amount had to be paid within only 10 days and non-payment of the amount within 10 days did not frustrate the contract. According to him the word 'only' appearing clause 1 of the agreement was meant to stress and qualify the amount of Rs. 98,000.00 and could not be read to mean as if payment within 10 days was the essence of the contract. Reliance has been placed by the learned Single Judge on Gomathinayagam Pillai and others v. Palaniswami Nadar, : [1967]1SCR227 to come to this conclusion.

(14) Betore as the respondents counsel also cited Nauik Lal Karmarkar v. Shankar Lal Shah and another, : AIR1962Cal103 and Arun Prokash Boral v. Tuisi Charan Bose, A:I.R. 1949 Cal 510 in further support of the above proposition.

(15) The rules ennuciated in the above decisions are undoubtedly the law of the land. A careful reading of the decisions would, however show that whether payment within a stipulated time is of the essence of the contract or not is to be gleaned not only from the phraseology of the terms of the contract. The intention about time being essence of the contract may be evidenced either by express stipulations or by circumstances which sufficiently strong to displace ordinary presumption that in contracts for sale of land stipulation as to time is not of the essence. Indeed, in Gomathinayagam Pillai's case (supra) the Supreme Court has relied upon this dicta laid down by the Privy Council in Jamshed Kodaram Irani v. Burjorji Dhunjibhai, A. I. R. 1915 P.C. 83.

(16) In the Calcutta decision relied upon, the Bench following another dicta of the Privy Council in Edridge v. R. D. SethJia had observed that the party aspiring specifically to enforce the contract must perform the condition precedent on his part before he becomes entitled to the relief. This observation was made in the context of whether tender of consideration money would be the essence of the contract if there were reciprocal promises to be performed on a true construction of the contract.

(17) In the other Calcutta decision relied upon, it was the vendor who was in default and it was held that being in default he could not claim to repudiate the contract by pleading that the time was of the essence of the contract. It was further observed that the real intention has to be gleened from all the circumstances taken together.

(18) thereforee, the law as we understand it, is that though generally in suits for agreements of sale of immovable property time will not be of the essence of the contract, it could, however, be held to be so even with regard to payment of consideration if from a reading of the agreement and the appreciation of the surrounding circumstances it appears that reciprocal promises had to be performed, in order that the transaction contemplated by the agreement is completed Accordingly, the first thing that comes up for consideration is to construe clause I of the agreement, Exhibit Public Witness 8/28.

(19) We have already Clause I earlier. The word 'only' occurs twice and in two different contexts. The first time that the word 'only' occurs is to specify the amount of Rs. 98,000.00 in words. At this stage there can be no doubt that the word 'only' has been used, as observed by the learned Single Judge, to qualify the amount. The amount having been qualified, there was no sense in using the same word again a second time. On the second occasion the word 'only' is used to qualify the period of 10 days. To say that the word 'only' though used a second time in this clause still only qualifies the amount of Rs. 98,000.00 would not be a correct reading of Clause I of the agreement. Why this wond was so used is explained by the appellant and her witnesses in their testimonies which. we have extracted at some length earlier. The respondents or their witnesses do not give any Explanationn as to why the word 'only' was used again in the context of the time within which Rs. 98,000.00 was to be paid. It seems to us that the contention of the appellant is correct. The purpose why she wanted Rs. 98,000.00 has been disclosed by her. She had to invest Rs. I lakh in the business at Poona and indeed wanted the money within one week. She was selling her house only for this purpose. It is clearly in evidence that the appellant and her husband wanted Rs. 98,000.00 to be paid within a week but at the request of the respondents the period of 10 days was stipulated in the agreement of sale. We are, thereforee, in respectful disagreement with the learned Single Judge that the word 'only' has been used in the context of specifying the amount and not in the context of specifying the time for performance of an obligation.

(20) In our view non-payment of Rs. 98,000.00 by the respondents entitled the appellant on or before September 6, 1971 to treat as a breach committed by the respondents. The surrounding circumstances which have come out in the evidence further fortify us in coming to this conclusion. Possession of the first floor was to be given by September 30, 1971. The first floor had been got vacated well before that date. Possession of the front portion of the ground floor was to be given at the time of the registration of the sale-deed. The respondents agree that such were the stipulations. Despite this the respondents started insisting upon the appellant giving possession of one room on the ground floor as a condition precedent to their paying Rs. 98,000.00 . The appellant who was apparently quite serious about selling her property had agreed to give a store instead by way of accommodating the respondents. They, however, continued to insist on possession of one room which was rightly declined by the appellant. Such a condition precedent in violation of the terms of the contract could not be put forward by the respondents. It seems the implementation of the contract of sale ran into heavy weather right from the beginning. The insistence of the respondents, as deposed to by them, that the appellant and her husband should first obtain income-tax clearance certificate and redemption of property before they paid Rs. 98,000 was also unjustified. Perhaps, as prudent persons the respondents did not want to further invest Rs. 98,000.00 having paid Rs. 30,000 earlier, till they were sure that the property had been redeemed and the income-tax clearance certifhad been given. May be it was a sensible approach to investing money but it was certainly not justified in terms of the agreement between the parties. The redemption of the property had to be effected by September 30, 1971. The income-tax clearance certificate was only required for the purposes of registration of the saledeed. Despite the terms being such insisting that these two documents be obtained prior to giving of Rs. 98.000.00 can only be regarded as trying to Vary the terms of the agreement In these circumstances, when the appellant caused the letter dated September 13, 1971 issued to the vendee, it cannot be said that her having treated the contract as having been breached, the stand was unjustified. If the vendee, namely, the respondents, wanted to keep the contract alive even after September 13, 1971 they could have offered Rs. 98,000.00 unconditionally but as admitted by the respondents in their testimony in court they still put the condition of the appellant giving possession of one room on the ground floor and obtaining income-tax clearance certificate and redemption documents. from the L.I.C. as conditions precedent to the payment of Rs. 98,000.00 . Such action can only be regarded as breach of the contract by the respondents. thereforee, we find force in the contention on behalf of the appellant that readiness and willingness is distinct from the essence of the contract. The respondents were never willing and ready to perform their part of the contract as entered into. They were ready and willing to go through with the sale transaction by varying the conditions to suit their convenience. Equity., thereforee, is certainly not in their favor. Indeed, as a reading of Section 16 of the Specific Relief Act would show vendee could not act at variance with the contract. That the appellant had not moved by the middle of September to get the income-tax clearance certificate or to get the property redeemed cannot be held against lier. She was required to have these only by September 30, 1971, in the case of redemption and by October 31, 1979 in the case of income-tax clearance certificate.

(21) Normally, a vendor will not be allowed to resile from the contract of sale by merely pleading time as the essence of the contract. If, however, circumstances so warrant the vendor will be entitled to be free from the obligations under the agreement of sale provided there is no mala fide act on the part of the vendor. In the present case we find none. It is not anybody's case that within three or four weeks that dispute arose between the parties the price of the property had gone up so much that the vendor had second thoughts. The transaction seems to have failed primarily on account of non-payment of Rs. 98,000.00 by September 6, 1971. By* the appellant treated it as a breach is understandable and cannot be said to be unjustifiable.

(22) In these circumstances we are unable to grant to the respondents a decree for specific performance. We accordingly accept the appeal and dismiss the suit for specific performance.

(23) Next comes the question of Rs. 30,000.00 . The appellant herself admitted that out of Rs. 30,000.00 Rs. 25.000.00 had been taken for the purpose of redemption of the property by payment to the L. I. C. Thus, the earnest money was really only Rs. 5,000.00 This is clear not only from the appellant's own testimony but also from the brokers. The appellant, thereforee, in our opinion, is not entitled to forfeit Rs. 30,000.00 . She could at best forfeit only Rs. 5,000.00 . He would have been persuaded to allow her to do so but for the fact that it is in evidence that since, 1971 the values of the properties have gone up considerably. She has actually suffered no less nor has any proof of loss been placed on record. Although earnest money is not meant to compensate loss and is not in lieu of damages, nonetheless on equitable principles if a party has not suffered loss but gain on account of frustration of the contract, in our opinion, the earnest money should not be allowed to be forfeited.

(24) Accordingly, while accepting the appeal we grant to the plaintiff/respondents a decree of Rs. 30,000.00 in their favor and against the appellant. The parties will bear their respective costthroughout.


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