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Sriram Cotton Pressing Factory (P) Ltd. Vs. K.E. Narayanaswami Naidu - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberAppeal No. 533 of 1961
Judge
Reported inAIR1965Mad352
AppellantSriram Cotton Pressing Factory (P) Ltd.
RespondentK.E. Narayanaswami Naidu
Cases ReferredSankaralinga v. Ratnaswami
Excerpt:
.....a legal inference to be derived from the facts. in the instant case, having regard to the conduct of the parties in extending the original time fixed for performance from time to time, time was an essential element.; case-law referred to. - - .....to the conduct of the parties in extending the original time fixed for performance, form time to time, time was an essential element, whether time is essential will have to be decided from the nature of the subject matter of the contract and the object of the contract. he having regard to the locality, the property agreed to be sold, is such that its value would necessarily change form time to time. that was perhaps why extension was sought and obtained from time to time. at the time when the plaintiff entered into he contract, the price was fixed at rs. 7500 per acre. by the time the plaintiff came to court for specific performance of the contract, the value of the property had considerably increased. when the object of the contract is commercial enterprise, the court is strongly.....
Judgment:
(1) This appeal arises out of a suit for specific performance instituted by the appellant and the question involved is whether he is entitled to the relief which he claims.

(2) The facts that led to the institution of the suit may be briefly referred to. It appears that the plaintiff appellant, a private company called Messrs. Shree Ram Cotton Pressing Factory, Ltd., having its registered office at Bombay, entered into an agreement of sale on 26-1-1957 with the defendant to purchase five acres of land in S. F. Nos. 424, 425 and 412 in the village of Souripalayam, Coimbatore taluk, at Rs. 7,500 per acre. The plaintiff also paid a sum of Rs. 5,000 as advance to the defendant. The land agreed to be purchased was for the purpose of constructing a cotton pressing and ginning factory, which the defendant knew even at the time of the agreement, but before the construction could be made, it was necessary that the area should be declared as an industrial area. Originally the time fixed for completing the sale transaction was two months form 26-1-1957, the date of the agreement, to enable the parties to apply to the concerned authorities and have the area in which the suit property is situate as an industrial area. But there is no mention of the purpose for which the property was intended to be purchased in he agreement of sale.

(3) Soon after the agreement of sale was entered into the plaintiff correspond with the Executive Officer, Panchayat Board, Peelamedu, requesting him to issue a certificate certifying the suit site as an industrial area. After some correspondence the Panchayat by its letter, dated 10-5-1957, Ex. A. 6, stated that he area cannot be declared as an industrial one, unless the proposal of the panchayat in that behalf is approved by the Director of Public Health. By then the time originally fixed for completing the sale transaction had expired. The plaintiff was, however, careful enough to see that the time was extended from time to time till 15-7-1958. It is the plaintiff's case that it requested the defendant as the owner of the property to get the declaration from the concerned authorities promising to give him a benefit in the mill which the plaintiff intended to start in the land agreed to be said. The defendant accordingly corresponded with the Executive Officer, Peelamedu Panchayat, Director of Public Health, Director of Town Planning and Deputy Secretary, Local Administration. On 25-11-1957, the Director of Public Health refused to give his approval to the Peelamedu Panchayat for declaring the site in question as an industrial area. Finally, under Ex. B. 7, dated 4-2-1958, the Government also refused to interfere in the matter. Nevertheless, the defendant carried on correspondence with the Deputy Secretary, Local Administration, requesting him at least to grant permission to install a 100 H. p. motor to run a pressing factory in the suit plot. By that time even the extended time for completing the sale transaction expired. It is common case the plaintiff did not get the time extended beyond 15-7-1958 and did not correspond with the defendant in that behalf.

On 13-9-1958, the defendant received a communication from the Government informing him that the Government had no objection of the grant of permission by the Peelamedu Panchayat for the installation of electric motor of 100 H. p. for running a cotton pressing factory. The plaintiff after coming to know of this communication wrote to the Executive Officer, Peelamedu Panchayat on 12-3-1959 under Ex. A. 7 without reference to the defendant requesting for the issue of a licence to the plaintiff to run a pressing factory. The plaintiff also wrote a letter Ex. A. 8 on 19-3-1959, to the Deputy Secretary to Government requesting the issue of necessary orders to the Peelamedu Panchayat Board to issue a licence. Within a month thereafter the plaintiff issued a notice to the defendant calling upon him to execute a sale deed in conformity with the terms of the agreement of sale and expressing its readiness and willingness to pay the balance of the sale price. The defendant in his reply notice Ex. A. 12 stated that the agreement in question had expired long ago and the plaintiff having abandoned the agreement was not entitled to call upon the defendant to execute sale deed. The plaintiff thereupon filed the present suit against the defendant for enforcing specific performance of the agreement of sale.

(4) The suit was resisted by the defendant mainly on the ground that time was the essence of the contract and the contract could not be performed on account of considerable laches on the plaintiff's part and therefore the suit was not maintainable.

(5) The learned Subordinate Judge of Coimbatore found that though the plaintiff was getting time for completion of the sale transaction extended form time to time, it finally waived and abandoned the contract. In regard to the alternative claims of the plaintiff for damages, the learned Judge held that the plaintiff was not entitled to any damages, but only to the refund of Rs. 5,000 paid as advance to the defendant. The learned Judge accordingly passed a decree for Rs. 5,000 only and dismissed the rest of the plaintiff's claims. It is against this judgment that the plaintiff has preferred this appeal and the question that arises for our consideration in this appeal is whether the lower court was right in refusing specific performance.

(6) It seems to us that there was palpable failure on the part of the plaintiff to carry out its part of the contract and having regard to the particular facts and circumstances proved, it should be held that he time was the essence of the contract and, in view of the events which have happened, the granting of decree for specific performance would involve hardship and inequity on the defendant. The plaintiff entered into an agreement to purchase the suit lands on 26-1-1957. Though ordinarily a period of two months was fixed for performance of the contract, the time was extended form time to item till 15-7-1958, to enable the parties to get the area declared as an industrial area. In the month of December 1957, the Government finally refused to approve the suggestion made by the Panchayat to declare the suit property as an industrial area. The time for performing the contract was not extended after 15-7-1958. The defendant, however, carried on correspondence subsequently with the concerned authorities for having the area declared as an industrial area. But the correspondence does not show that the was pursuing the mater on plaintiff's behalf or for plaintiff's benefit. That defendant's evidence is that he wrote Exs. B. 8 and B. 9 a on his own initiative. He might have written those letters for grant of a licence for installing a 100 HP motor for his own benefit and thereby enhancing the value of the property.

The plaintiff is unable to explain the reason for the failure to have the time extended after 15-7-1958. He kept quiet for a period of 9 months form that date and it was only on 22-4-1959 he gave notice to the defendant through his counsel calling upon the defendant to complete the sale transaction as per the terms of agreement of sale. P.W. 1 in his evidence unhesitatingly stated that the very basis of the purchase was that he defendant should get the suit site declared as an industrial area and that "the plaintiff was not prepared to purchase the property before 30-9-1958". He admits there was no extension of time after 15-7-1958. He states categorically that he was not prepared to take the sale on 15-7-1958. On the fact of this evidence it is reasonable to infer that the plaintiff has abandoned the contract on the Government finally refusing to declare the property as within an industrial area and has come to court for enforcement of the agreement which could not be performed on account of its own laches. While dealing with the question of laches, in his "Specific Performance" 6th Edn. Says at page 515, para 1102, that laches on the part of the plaintiff (whether vendor or purchaser) in executing his part of the contract or in applying to the court will debar him form relief. The learned author refers in this connection to the observations of Lord Alvanley M.R. that.

"A party cannot call upon a court of Equity for specific performance unless he has shown himself ready, destroys, prompt and eager."

and Lord Cranworth that

"specific performance is relief which this court will not give, unless in cases where the parties seeking it come promptly, and as soon as the nature of the will permit."

Similarly, the law as to when and under what circumstances delay is a bar to a legal remedy is very clearly laid down in Lindsay Petroleum Co. V. Hurd (1874) 5 PC 221, thus at page 239.

"Now the doctrine of laches in courts of Equity is not an arbitrary or a technical doctrine. Where 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 a 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 tot be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitation, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, at the length of the delay and the nature of the acts done during the interval, which might effect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to that remedy".

(7) Similarly a Bench of this court consisting of Rajamannar C. J. and Venkatarama Aiyar J., held inSankaralinga v. Ratnaswami, :

"Mere delay does not by itself preclude the plaintiff from obtaining specific performance if his suit is otherwise intimate. The delay must be such that it may be properly inferred that the plaintiff has abandoned his right or on account of delay the must have been such a change of circumstances that he grant of specific performance would prejudice the defendant. It is also well settled that waiver is not to be inferred merely from delay in the institution of the suit"

In the instant case, there was a delay of about nine months between the last extended time and the notice given by the plaintiff to the defendant calling upon the latter to execute a sale deed. There was no correspondence during this period between the plaintiff and the defendant with regard to extension of time for completion of the contract and there is nothing to show that anything was done by the plaintiff to keep alive the agreement of sale. In the above circumstances, the principle laid down in the above case would apply to the facts of this case and from the considerable delay and laches on the part of the plaintiff, we can easily infer that there was a waiver or abandonment of the contract.

(8) The question whether time was of the essence of the contract is surely a question of law and not of fact, being a legal inference to be derived from the facts. In the instant case having regard to the conduct of the parties in extending the original time fixed for performance, form time to time, time was an essential element, whether time is essential will have to be decided from the nature of the subject matter of the contract and the object of the contract. He having regard to the locality, the property agreed to be sold, is such that its value would necessarily change form time to time. That was perhaps why extension was sought and obtained from time to time. At the time when the plaintiff entered into he contract, the price was fixed at Rs. 7500 per acre. By the time the plaintiff came to court for specific performance of the contract, the value of the property had considerably increased. When the object of the contract is commercial enterprise, the court is strongly inclined to hold time to be essential. Fry in his Specific Performance says at page 505, para 1081:--

"Where the object of the contract is a commercial enterprise, the court is strongly inclined to hold time to be essential, whether the contract be for the purchase of land for such purposes, or more directly for the prosecution of trade. This principle has been acted on the matter of a contract respecting land which had been purchased for the erection of mills..................."

Similarly S. C. Banerji in his Tagore Law Lectures on Law of Specific Relief in British India, says at page 381:--

"Where the delay of the vendor or vendee in seeking performance is for speculative purposes, where, for instance, he has entered into the contract without the present means of performing it, or desires to wait until the time shall determine whether or not it is to his advantage to have the benefit of the contract, there is authority for holding that equity will not aid him by any relief against his failure to perform whatever the situation otherwise".

(9) If the relief asked for by the plaintiff is granted, it would involve hardship and inequity to the defendant, which it would be neither just nor expedient to inflict upon him. The appeal is therefore dismissed with costs.

(10) Appeal dismissed.


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