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Gurdial Singh Vs. Pearey Lal Malhan - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberCivil Regular First Appeal No. 321 of 1968
Judge
Reported inAIR1982Delhi120; 20(1981)DLT318
ActsIndian Contract Act, 1872 - Sections 39
AppellantGurdial Singh
RespondentPearey Lal Malhan
Advocates: N.S. Sistani and; H.S. Tyagi, Advs
Cases ReferredIn Muralidhar Chatterjee v. International Film Co. Ltd.
Excerpt:
the case discussed the right of other parties on refusal of the seller to perform the contract entered between the parties and the sellers, under section 3 read with sections 64 and 65 of the contract act, 1872 - it was held that, in such case, the buyer was entitled to the refund of the amount paid as advance, as per the terms of the agreement - .....amount was payable before the sub-registrar. initially the parties had agreed to execute the sale deed within 15 days from the date of the said receipt but subsequently the said period was extended to 45 days ending 7th september, 1965. it is not disputed that the time was the essence of the contract. this extension was made by making amendment in the original receipt duly signed by the parties. the plaintiff alleges that he has always been ready and willing to perform his part of the contract but the defendant committed breach of contract and also cancelled the same. the plaintiff, thereforee, as already stated, claimed the refund of rs. 10,000.00 and interest thereon. the trial court by the impugned judgment passed a decree for rs. 10,000.00 with costs. (2) learned counsel for.....
Judgment:

Sultan Singh, J.

(1) This first appeal has arisen out of a suit filed by the respondent for recovery of Rs. 10,300.00 on account of refund of Rs. 10,000.00 paid by him to the defendant-appellant in pursuance to an agreement to sell dated 24th July, 1965 and Rs. 300.00 as interest. The plaintiff paid Rs. 10,000.00 to the defendant-appellant on 24th July, 1965 as per receipt Ex. P-12. According to this receipt the appellant agreed to sell his property at plot No. 8/37, Kaila Colony, New Delhi for a consideration of Rs. 75.000.00 The balance amount was payable before the Sub-Registrar. Initially the parties had agreed to execute the sale deed within 15 days from the date of the said receipt but subsequently the said period was extended to 45 days ending 7th September, 1965. It is not disputed that the time was the essence of the contract. This extension was made by making amendment in the original receipt duly signed by the parties. The plaintiff alleges that he has always been ready and willing to perform his part of the contract but the defendant committed breach of contract and also cancelled the same. The plaintiff, thereforee, as already stated, claimed the refund of Rs. 10,000.00 and interest thereon. The trial court by the impugned judgment passed a decree for Rs. 10,000.00 with costs.

(2) Learned counsel for the appellant submits that the appellant had always been ready and willing to perform his part of the contract. He says that the defendant obtained income-tax clearance certificate, that he vacated the suit property and took another premises for his occupation with a view to execute the sale deed and deliver possession to the respondent. He further says that the plaintiff was not ready and willing to perform his part of the contract and that he was not possessed of Rs. 65,000.00 , the balance of sale consideration for the purchase of the property. The trial court after referring to the evidence on record held that the plaintiff was possessed of funds to pay the balance of sale consideration and get the sale deed executed, that the defendant cancelled the agreement on 6th September, 1965 although the last date for the performance of the contract was 7th September, 1965, that the defendant as not possessed of a genuine income-tax clearance certificate for getting the sale deed registered, that the breach was committed by the defendant and thereforee a decree for Rs. 10,000.00 was passed in favor of the plaintiff-respondent.

(3) The appellant says that in terms of the agreement of sale he was not required to obtain any income-tax clearance certificate and that the plaintiff committed the breach. The sale consideration is Rs. 75,000.00 and for getting the sale deed registered for a consideration of more than Rs. 50,000.00 the registering officer under the Indian Registration Act is not authorised to register the same unless the income-tax officer concerned issues a clearance certificate as provided in section 230A of the Income-tax Act, 1961. It is correct that in the agreement to sell there is no condition for the production of income-tax clearance certificate but when the parties enter into an agreement to sell and the law prescribes a condition before a document can be registered, the condition prescribed by the statute becomes a part and parcel of the agreement. In other words, it seems that the requirement of section 230A of the Income-tax Act should be deemed to be an implied condition of an agreement to sell between the parties when the sale consideration is more than Rs. 50,000.00 . From the record it appears that the defendant never informed the plaintiff that he had applied or obtained the income- tax clearance certificate. Nothing has been brought to my notice on behalf of the appellant to show that any such intimation was ever given by the appellant to the respondent. On the other hand, the case set up by the plaintiff is that the defendant expressed his inability to secure the income- tax clearance certificate on 2nd September, 196^. The defendant, it is alleged thereforee suggested that instead of one sale deed two sale deeds be executed one for 3/5th of the house in consideration of Rs. 45,000.00 and the other for 2/5th of the house in consideration of Rs. 30,000.00 . The plaintiff further says that in pursuance of this suggestion he purchased a non-judicial stamp paper for the execution of a sale deed in consideration of Rs. 45)000.00 on 3rd September, 1965 which was handed over to the defendant for getting the sale deed written thereon. The plaintiff further says that the defendant got the sale deed typed out but he got the sale deed of the entire property and not for 3/5th of the house. He further says that the defendant wanted him to pay the balance of the sale price under the table. This was not acceptable to the plaintiff and obviously for the reasons that the property might be acquired under section 269-C of the Income tax Act on the ground that the sale consideration of Rs. 45,000.00 was not a fair market value. There is a dispute between' the parties about the bifurcation of the transaction into two documents. This, however, is not a material dispute for the decision of the present appeal.

(4) On 4th September, 1965 the plaintiff sent a telegram Ex.P.l to the defendant requiring him to arrange for the income-tax clearance certificate by 6th September, 1965 and to execute the sale deed on 7th September, 1965. A notice Ex. P.2 was also issued by the plaintiff's counsel to the defendant. It appears that the defendant did not take any action but on 6th September 1968 he sent a telegram Ex. P.4 through-his counsel to the plaintiff cancelling the agreement dated 24th July, 1965. The defendant in his notice dated 6th September, 1965 Ex. D-l intimated the plaintiff that the sum of Rs. 10.000.00 stood forfeited. By a notice dated 10th September, 1965 the plaintiff demanded the refund of Rs. 10,000.00 with damages.

(5) Learned counsel for the plaintiff submits that anticipatory breach of the contract was committed by the defendant and thereforee the plaintiff was entitled to treat the contract as cancelled and claim the refund of the amount. It is not disputed that the defendant cancelled the contract by the said telegram. Ex. P.4. Section 39 of the Contract Act reads as under:

'S. 39. When a party to a contract has refused to perform or disabled himself from performing, his promise in its entirety, the promisemay put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.'

Under this section, the defendant refused to perform his part of the contract and thereforee the plaintiff was entitled to put an end to the contract. The plaintiff did so by demanding the refund of the sum of Rs. 10,000.00 paid in advance. On the cancellation of the contract the plaintiff had two remedies; to institute a suit for specific performance or to bring an action for the breach i.e. for the refund of amount paid by him. When the defendant cancelled the contract the plaintiff is discharged from the obligations of the contract. He was not required to perform conditions after the defendant cannot demand the plaintiff to perform any part of the contract. In District Board, Jhelum v. Hari Chand, Air 1934 Lah 474 it is observed that a party to a contract who commits a breach of the contract cannot require the other party to perform his part of the contract. Thus it is clear that after the cancellation of contract on 6th September 1965 there was no obligation on the part of the plaintiff to do any act for the completion of the contract. On the other hand, under section 64 of the Contract Act the plaintiff is entitled to receive back the amount paid by him to the defendant. Section 64 of the Indian Contract Act reads as under:-

'WHEN a person at whose option a contract is voidable rescinds it the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall, if he have received any benefit there under from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.'

In the present case the defendant cancelled the contract and he had received Rs. 10,000.00 under the contract. He is thereforee liable to refund this amount to the plaintiff. In Muralidhar Chatterjee v. International Film Co. Ltd. it was held that section 64 of the Contract Act applied to cases of rescission of contract under section 39 and that a liability to make restitution attaches to the party putting an end to a contract under sections 39 of the Contract Act. Thus under sections 39 and 64 of the Contract Act on the cancellation of the contract by the defendant the plaintiff became entitled to the refund of the amount received by the defendant without proving anything more. The trial court, as already stated, held that the plaintiff was ready and willing to perform his part of the contract and that the defendant committed the breach and thereforee a decree was passed. But in the present case when the defendant himself cancelled the contract, I am of the view that it is not necessary to decide whether the plaintiff was ready and willing to perform his part of the contract. Learned counsel for the appellant, however submits that the plaintiff is not entitled to the refund of the said amount on the ground that he was not ready and willing to perform his part of the contract. As already stated, this question does not arise when the defendant himself cancelled the contract on 6th September 1965 while the last date for completion of the contract was 7th September, 1965. Lender sections 39 and 64 of the Contract Act the defendant, as already stated, is liable to pay the amount. In any case the parties have taken me through the evidence on record and there is no reason to reverse the finding of the trial court holding that the plaintiff was ready and willing to perform his part of the contract. There is sufficient oral and documentary evidence on record that the plaintiff was in a position to pay Rs. 65,000.00 to get the sale deed executed in his favor on or before the agreed date. The plaintiff was not required to perform any other act under the agreement. It was the defendant who committed the breach. He did not obtain the clearance certificate for the execution of the sale deed. No intimation was ever sent by the defendant to the plaintiff about any clearance certificate. The trial court on an appreciation of evidence on record has rightly concluded that the document Ex. D. 2 was not a genuine document. Moreover, the document Ex. D. 2 was not proved in accordance with law. The Income-tax inspector who appeared before the court as D.W. 2 could not decipher the signatures of the alleged income-tax officer on the said certificate. There was also no proof to show that any certificate was issued by the Income-tax Department before the crucial date.

(6) There is no infirmity in the judgment of the trial court. The appeal has no merit and thereforee it is dismissed with costs.


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