1. The plaintiff in O. S. No. 687 of 1967 on the file for the Court of the District Munsif of Gobichettipalayam, who succeeded before the trial Court, but lost before the first appellate Court, is the appellant herein. Admittedly the suit properties originally belonged to the joint family of one Krishna Gounder and his sons. The said Krishna Gounder acting for himself and as guardian of his minor sons sold the suit properties to the defendant on 17-10-1962 for a consideration of Rs. 1500. Subsequently under Ex. A-1 dated 17-6-1963 the defendant in the present suit entered into an agreement with Krishna Gounder agreeing to sell the suit properties to him for a consideration of Rs. 1,500 and received an advance of Rs. 10 and it was agreed that the balance was to be paid and the sale deed to be executed in any 'Chithirai Kalvathi' within four years. Admittedly Krishna Gounder assigned the right secured under Ex. A-1 in favour of the plaintiff in the present action under Ed. A-2 dated 6-4-1964. Admittedly the plaintiff did not pay the balance in any Chithirai Kalavathi within four years, but offered to pay the balance and take the sale deed 34 days after the expiry of that period. On the defendant refusing to execute the sale deed, the present suit was instituted by the plaintiff for specific performance of the agreement Ex. A-1. One of the contentions raised by the defendant in the suit was that Ex. A-1. was not an agreement to sell the suit property simpliciter, but was an agreement to reconvey the properties, that therefore with reference to such an agreement, the time was of the essence of the contract and that since admittedly the plaintiff did not pay the amount and obtain the sale deed within the period stipulated in Ex. A-1, he was not entitled to any relief in the present suit. However. the case of the plaintiff was that Ex. A-1 was not an agreement to reconvey the properties, but it was an agreement to sell the properties simpliciter, that therefore time was not presumed to be the essence of the contract and that consequently he was entitled to a decree for specific performance. The learned District Munsif, who tried the suit, accepted this case of the plaintiff and held that the agreement Ex. A-1 was an agreement simpliciter to sell the properties by the defendant to Krishna Gounder, the assignor of the plaintiff and therefore decreed the suit. However, on appeal preferred by the defendant. The learned Additional Subordinate Judge of Erode reversed the conclusion of the learned District Munsif and held that the agreement Ex. A-1 constitution an agreement to reconvey the properties and that with regard to such an agreement, time was of the essence of the contract, that since admittedly the plaintiff-appellant did not pay the amount within the time stipulated under Ex. A-1, he was not entitled to a decree for specific performance and therefore dismissed the suit instituted by the plaintiff. Hence, the present second appeal by the plaintiff in the present action.
2. Having regard to what I have stated above, the only question that arises for consideration is, whether Ex. A-1 constituted an agreement of reconveyance or was an agreement to sell the properties simpliciter. The learned Subordinate Judge has recognised the fact that there was an interval of eight months between the sale deed dated 17-10-1962 and Ex. A-1 agreement dated 17-6-1963. Notwithstanding this, the learned Subordinate Judge took the view that having regard to the fact that the amount for which the properties were agreed to be sold was the very identical amount for which the defendant purchased the properties from Krishna Goundar and also having regard to the further fact that a long time was prescribed for the purchase of the properties by Krishna Gounder, the agreement Ex. A-1 must be construed to be only an agreement to reconvey the properties and not an agreement to sell the properties simpliciter. He also took into account that the properties were worth Rs. 3,500 on the date of Ex. A-2 and that still the plaintiff paid only Rs. 2000 for obtaining an assignment of the right under Ex. A-1. That also, according to the learned Subordinate Judge would show that EX. A-1 agreement was not an agreement simpliciter, but only an agreement of reconveyance of the properties. However, he also noted one significant fact. That is, the admission of D.W. 1, the defendant, that no agreement of reconveyance was executed on the date of sale by Krishna Gounder, not was there any oral agreement for reconveyance at any time in respect of the suit properties. In my opinion, this finding and the above admission on the part of D.W. 1 are fatal to the case that Ex. A-1 constituted only an agreement to reconvey the properties. I am of the opinion that the very concept of an agreement to reconvey involves a contemporaneous understanding between the parties at the time of the original sale itself that the vendee should reconvey the properties subsequently even though the formal document embodying this understanding may come into existence later. Otherwise, the very concept of reconveyance which has been recognised to be a concession or privilege conferred on the a concession or privilege conferred on the vendor by the vendee at the time of the original purchase of the properties will have no significance whatever In this case, I may not attach and significance even to the fact that there was an interval of eight months between the date of the original sale, namely, 17-10-1962 and the dated of Ex. A-1 namely 17-6-1963, if there had been an understanding on 17-10-1962 itself that Krishna Gounder, the vendor of the properties should have a right to repurchase the properties from the defendant later, subject to certain conditions or fulfilment of certain stipulations. But in this case, there is the clearest possible evidence on the part of the defendant as D.W. 1, who was directly a party to the sale deed as well as Ex. A-1 that no agreement of reconveyance was executed on the date of the sale, namely, 17-10-1962 and that there was no oral agreement for reconveyance at any time in respect of the suit properties. Therefore, Ex. A-1 is a totally independent transaction utterly unconnected with and dissociated from the original sale on 17-10-1962 and consequently Ex. A-1 cannot be said to be an agreement to reconvey the properties. If there had been at least no evidence either way, namely, as to whether there was an understanding at the time of the original sale deed at all with regard to the reconveyance or not, the other features present in Ex. A-1 pointed out by the learned Subordinate Judge, may tend to an inference that there should have been such an understanding. In this case, there being direct evidence that there was no understanding at the time of the original sale to reconvey the properties, there can be no scope whatever for holding that Ex. A-1. constituted an agreement to reconvey the properties.
3. In Kandaswami Mudaliar v. Munuswami Udyar, (1974) 87 MLW 384, a Bench of this Court had occasion to consider a particular agreement as to whether it was an agreement to reconvey or an agreement to sell the property simpliciter. The learned Judges pointed out:
'Apart from the difference in the price, the sale deed and the agreement to convey are not contemporaneous documents. The sale deed were executed in 1950 but the agreement to convey was entered into only in 1952. It was in fact not claimed in the written statement by the defendant that the agreement was executed in pursuance of an agreement to reconvey the property.'
I am again emphasizing the fact that it is not the difference in time of two years that will decide the issue, but it is the absence of any claim that there was an understanding at the time of the original sale itself to reconvey the properties which understanding was subsequently reduced to writing in 1952 that will determine the issue so as to hold that the agreement was not an agreement to reconvey the properties.
In Varadarajulu Iyer v. Arumugha Gounder, : AIR1960Mad203 another Bench of this Court had occasion to consider whether time was the essence of a particular contract and while considering that question the learned Judges pointed out:
'But there may be cases where time is made the essence of the contract. There may be also cases, where. though time was not made expressly as the essential term of the contract, the substance or nature of the contract is such that time would be deemed to be of the essence. In regard to contracts relating to immovable property, such cases occur in contracts for repurchase or reconveyance of property. In those cases, there is generally an outright sale of the property accompanied by an agreement to reconvey the same on being so required to do by the original vendor within the stipulated time.'
When the learned Judges stated, 'accompanied by an agreement to reconvey the same', they did not intend to lay down that there must be a document accompanying the sale deed, but all that they intended to lay down was that there must have been an understanding or agreement between the parties that the vendee should subsequently reconvey the property to the vendor, even though a formal document embodying the understanding might come into existence later.
4. These two decisions support the view that I have taken, namely, that the understanding to reconvey the properties should form part of the bargain of the original sale of the properties. That, in my opinion, constitutes the very essence of the agreement to reconvey. Once that understanding is absent, the mere fact that subsequently an agreement was entered into between the two parties, who happened to be the vendee and the vendor under the earlier transaction will not convert the agreement into an agreement to reconvey and it will remain and continue to be an agreement of sale of immovable properties simpliciter. Having regard to the admission of D.W. 1 in the present case that there was no oral agreement even at the time when the original sale took place on 17-10-1962 to reconvey the properties, it would inevitably follow that Ex. A-1 cannot be an agreement to reconvey the properties, but can only be an agreement to sell properties simpliciter. In such a case, it is not disputed that the normal rule is that the time is not of the essence of the contract and therefore the suit instituted by the appellant being within time, it not having been barred by limitation, he is entitled to the relief for specific performance prayed for.
5. Accordingly the second appeal is allowed and the judgment and decree of the learned Additional Subordinate Judge of Erode dated 2nd March, 1971 are set aside and those of the learned District Munsif of Gobichettipalayam dated 27 September, 1968 are restored. The parties will bear their respective costs throughout. No leave.
6. Appeal allowed.