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S.P. Narayaaswami Pillai Vs. Dhanakoti Ammal - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 348 of 1962
Judge
Reported inAIR1967Mad220
ActsIndian Contract Act, 1872; Specific Relief Act, 1963 - Sections 16 and 22(2)
AppellantS.P. Narayaaswami Pillai
RespondentDhanakoti Ammal
Cases ReferredIn Badruddin v. Tufail Ahemd
Excerpt:
.....and balance to be paid during registration--vendor failing to execute sale deed--purchaser filing suit for specific performance--proof necessary--bona fides of purchaser--whether possession of balance amount to be proved-considerations ; the defendant executed an agreement of sale in favour of the plaintiff on 23rd june 1958, whereunder he received an advance. the contract of sale had to be completed within three months and the balance of sale consideration was made payable on 23rd september 1958, at the time of the registration of the conveyance. the document contained the usual default clause providing for the forfeiture of the advance in the event of the plaintiff failing to complete the sale as provided. the plaintiff had purchased the stamp papers on 20th september 1958, the last..... (1) the plaintiff whose suit for the specific performance of an agreement for sale in his favour of a house property has been dismissed by the learned district judge, north arcot, reversing the decree for specific performance given by the learned subordinate judge is the appellant before me.(2) the material facts of the case are not very much in dispute and may be briefly set out. the agreement for sale is evidenced by ex. a. 1, dated 23-6-1958 where under the defendant, the admitted owner of the property has received an advance of rs. 500, the price fixed for the conveyance being rs. 9,700. the contract for sale had to be completed within 3 months, the balance of price namely, rs. 9200 being payable by 23-9-1958 at the time of the registration of the sale, expenses of the execution and.....
Judgment:
(1) The plaintiff whose suit for the specific performance of an agreement for sale in his favour of a house property has been dismissed by the learned District Judge, North Arcot, reversing the decree for specific performance given by the learned Subordinate Judge is the appellant before me.

(2) The material facts of the case are not very much in dispute and may be briefly set out. The agreement for sale is evidenced by Ex. A. 1, dated 23-6-1958 where under the defendant, the admitted owner of the property has received an advance of Rs. 500, the price fixed for the conveyance being Rs. 9,700. The contract for sale had to be completed within 3 months, the balance of price namely, Rs. 9200 being payable by 23-9-1958 at the time of the registration of the sale, expenses of the execution and registration of the sale deed to be borne by the purchaser, namely, the plaintiff. There was the usual default clause providing for the forfeiture of the advance in the event of the purchaser failing to complete the sale as provided. The plaintiff secured an encumbrance certificate for the property on 8-9-1958, and there is evidence that the defendant cleared an encumbrance over the properly in favour of the Varalakshmi Bank on 13-9-1958. It is also established that by 20-9-1958 the plaintiff had purchased stamp papers of the value of Rs. 765 for engrossing the sale deed. On 23-9-1958, that is, the last day as shown in the agreement for sale for completing the transaction, the plaintiff filed the suit for specific performance out of which this second appeal arises complaining that in spite of his having been ready and willing to perform his part of the contract, the defendant contended that the plaintiff failed to receive the balance of consideration and execute the sale deed. The defendant contended that the plaintiff had not the requisite balance of consideration with him on 23-8-1958, that even earlier the plaintiff had sought of the defendant a loan Rs. 6000, that on 22-9-1958 she had sent her husband to inform the plaintiff that she would wait at the Sub Registrar's office on 23-9-1958 and that she waited in the Sub Registrar's officer till 4 p.m. that there was no bona fides in the suit as the plaintiff had not deposited the balance of consideration when filling the suit, that time was essence of the contract, that the suit was prematurely instituted without even issuing a notice to the defendant and that in the circumstance the plaintiff was not entitled to specific performance. At the time of arguments in the trial court, each side sought to throw the entire blame on the other and the defendant while giving evidence expressed her readiness to register the sale deed if money was paid even then. Within three days, the plaintiff deposited the entire balance of consideration into court. On this, the learned Subordinate Judge, while penalising the plaintiff for not issuing a notice to the defendant by depriving the plaintiff of his costs decreed the suit for specific performances. But the learned District Judge on appeal while agreeing with the conclusion of the trial court that time was not the essence of the contract, took the view that as the plaintiff had not the balance of consideration till he deposited the money into court there was no force in this contention that he was ready and willing to perform his part of the contract. Commenting on the failure of the plaintiff to tender the balance to the defendant he found against the claim of the plaintiff for specific performance and dismissed the suit with costs. In my view, on the facts and circumstances of the case, this is an extraordinary decision to take.

(3) There has been no contention before me, nor do I find it adumbrated specifically in that form in arguments in the courts below that the suit does not lie because it was premature. The plea of the defendant was that there was no bona fides in filling this suit on 23-9-1958 itself prematurely and that it had been filed only with a view to gain time, the plaintiff not having had the cash to pay the balance of consideration. The contention that the suit is premature on the facts of the case would be highly technical as the court could always take note of cause of action arising subsequent to the presentation of the plaint and was naturally not mooted in that form. As felt by the learned Subordinate Judge, this will be a matter for consideration in awarding costs of the proceedings. All the same it must be remarked that if the plaintiff had rushed to the court without any necessity and the defendant had no objection on her part, she could have straightway expressed her readiness and willingness to a decree and performance mulcting the plaintiff with all the costs. As noticed inAbdul Shaker Sahib v. Abdul Rahiman Sahib. ILR 46 Mad 148: (AIR 1923 Mad 284) where specific performance of sale has not been effected within the period laid down by the decree, it is open to the vendor who will be the defendant in the suit to apply for a final and peremptory order for specific performance or for an order residing in the contract either immediately or to follow automatically on the expiry of the period peremptorily granted. Equally it would have been open to the plaintiff purchase to apply to the court for an extension of time for payment of the purchase money.

(4) A few more dates may now be given as they have a bearing on the course of the suit and for consideration of the question whether the suit had been unnecessarily delayed by the plaintiff not having been in a position to find the requisite money within a reasonable period. The suit was filed on 23-9-1958, the last date as provided in the agreement for sale, Ex. A. 1. The summons in the suit was served on the defendant on 16-10-1958, and the defendant filed her written statement contesting the claim for specific performance on 18-11-1958. The plaintiff when examined rested his affirmation in the plaint of his readiness and willingness to perform his part of the contract. He offered in his deposition, to deposit the required amount in one month's time and take the sale deed. It may be stated that there is evidence that he is a man of some properly. There was no cross-examination of his statement in the box that he kept the Everest Bakery. Everest Files and the Everest Theatre in Ranipet. When the defendant was examined as D.W. 1 on 27-3-1959, she stated that even that day if the plaintiff paid the money, she was willing to register the sale deed. Thus evidence was a given on a Friday. On the immediate Monday, the 2nd of March 1959, a Sunday having intervened, admittedly the plaintiff deposited into court the entire balance of consideration. It may be seen that, in spite of the suit having been pending, much time had not elapsed since the date fixed in the agreement for performance. A surprising argument has been advanced and this appears to have found acceptance by the learned District Judge that the plaintiff must show his capacity to make the payment through the entire period of the contract. It is argued that as readiness and willingness must be present though the entire period of the contract that involved the capacity to the money also. It may be taken that both the courts have found that the plaintiff had not the requisite money on 23-8-1958, the last day fixed in the agreement for completion of the sale, that is, the day on which the suit was filed.

(5) Mr. A. Sundaram Iyer, learned counsel for the respondent, contended that a mere statement of readiness and willingness to perform the contract will not do and that the plaintiff must establish the truth of the same when challenger. It is contended that on the finding that the money was available only on 2-3-1959, it was clear that the plaintiff could not have performed the contract earlier and that there could be no decree for specific performance in his favour. I am not able to accede to this argument. Once it is held that with reference to a particular contract, time is not the essence, then the readiness and willingness which the plaintiff must establish is the readiness and willingness to perform his part of the contract at the proper time, that is, within a reasonable time. If time could be reasonably extended and if he establishes his capacity to perform the contract within the extended time, that will be sufficient. All that the Privy Council has observed in Adeshir v. Flora Samsom, AIR 1928 PC 208 at p. 216 is:

"In suit for specific performance on the other hand, he treated and was required by the Court to treat the contract as still subsisting. He had in that suit to allege, and if the facts was traversed, he was required to prove a continuous readiness and willingness, from the date of the contract to the time of the hearing to perform the contract on his part. Failure to make good that averment brought with it the inevitable dismissal of his suit."

In my view when time is provided for performance, readiness and willingness on the part of the person seeking performance can only mean that on his part he has through the period kept the contract as a subsisting one with a preparedness to fulfill his obligations and accept performance when the time came. This does not mean that the purchase should besides show that he had command of the necessary finance throughout the life of the contract. Such an insistence will make the fixing of a time for performance meaningless.

(6) There can be no doubt it that time in this case was not the essence of the contract. There is noting in the agreement or in the surrounding circumstances at the time of the contract suggest the contrary. This is a simple contract for the sale of immovable property and the agreement is in the usual form. No special circumstance subsisting at the time of the contract has been made out to warrant an inference against the usual presumption that time was not the essence of the contract in an agreement for sale of immovable property. After referring to the Indian Contract Act 1872, their Lordships of the Judicial Committee observe in Jamshed Khodaram v. Burporji Dhunjibhai, ILR 40 Bom 289 at p. 297: (AIR 1915 PC 83 at p. 84):

"Their Lordships do not think that this section lays down any principle which differs from those which obtain under the law of England as regards contract to sell land. Under that law equity, which governs the rights of the parties in cases 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 more than that it should take place within a reasonable time".

Proceeding, their Lordships observed thus:

"The special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regards the time of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depends on the observance of the time limits prescribed in a fashion which is unmistakable. The language will have this effect if it plainly excludes the notion that these time limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that left at its foundation".

Learned counsel for the respondent cannot point out anything in this particular transaction which would make time essence of the contract. A vague statement was made that money was required for a marriage. That by itself is not sufficient apart from the absence of any evidence of putting the plaintiff in notice of any peremptory requirement.

(7) Can it be said in this case that there was any undue delay on the part of the plaintiff in finding the requisite money? After the court got seizing of the case even before any direction by the court, he paid the money into court on the offer of the defendant to execute to the conveyance. In the case in ILR 46 Mad 148: (AIR 1923 Mad 284) already referred to, the power of the court to grant extension of time for deposit in appropriate cases where the decree itself has fixed time for the deposit has been affirmed. In the new Specific Relief Act 47 of 1963, Section 16 provides in case of contracts involving the payment of money that 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, the plaintiff having only to aver the performance of or readiness or willingness to perform the contract according to its true construction. In Bank of India v. Chinory, AIR 1950 P. C. 90 at p. 96 Lord MacDermott observes thus:

"It is true that plaintiff I stated that he was buying for himself, that he had not sufficient ready money to meet the price and that no definite arrangements has been made for finding it at the time repudiation. But in order to prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction".

In Subayya v. Garikapati Veeyaya AIR 1957 Andh Pra 307, Subba Rao C. J. observes at p. 313:

"Even otherwise, on the evidence I am satisfied that the first plaintiff was substantial enough to make ready the necessary amount if the occasion arose. I hold that the first plaintiff was ready and willing to perform his part of the contract."

(8) A purchaser could be said to be ready and willing to perform his part of the contract if he could find the money when the occasion arose. He need not keep the money and establish that he had the money in advance. In the same case at page 329 (AIR 1957 Andh Pra 307 (329) Chandra Reddy J. as he then was, observes:

"These passage clearly indicate that the purchaser need not establish that he had the required money with him or arrangements have been made for financing the transaction. What is required of him is to show that he was ready and willing to fulfill his terms of the agreement."

In this connection reference may also be made to a recent decision of this Court in Palanichami Nadar v. Gomathinayagam Pillai 78 Mad L. W. 186: (AIR 1966 Mad 46), where there was originally, an oral agreement for the sale of land. There was subsequently a written agreement providing the execution of the sale before 15-4-1959 with a default clause added for forfeiture of the sum of Rs. 3006 which had been paid as advance. There was a further agreement on 15-4-1959 extending the time upto 30-4-1959. On 30-7-1959, the vendors complained of breach of contract and purported to cancel the agreement and forfeit the deposit. On 3-8-1959 the purchaser deposited the balance of money required in a bank and claiming specific performance filed the suit. Delivering the judgment of the Bench, decreeing the suit, Veeraswami J. observed at p. 190 (of Mad LW): (at p. 49 of AIR) thus:

"The question then is, whether the appellant being, as found by the trial court which, as we said, is not contested before us, a defaulting party he is entitled to a decree for specific performance. That would depend upon whether there was undue delay on the part of the appellants and whether respondents 1 and 2 have given him reasonable notice that he must complete the agreement within a definite time. In this case, there was undoubtedly delay on the part of the appellant in performing his part of the contract on and from 30-4-1959 to 30-7-1960. But we wound by any means call it as undue delay, keeping in view that the contract related to sale of immovable property and that there was no great urgency about it".

(9) Failure to find money or prove possession of money before the time for performance has arrived can never be taken as a breach entitling the vendors to resile from the contract, and when the contract is for the sale of immovable property the vendor must give reasonable notice requiring performance within a definite time.

(10) Illustrative of the position, reference may be made to the decision in Jenning's Trustee v. King, 1952-1 Ch. 899. There a vendor of land under a contract where time was not of the essence of the contract who received notice between the date of the contract and the day fixed for completion that the purchaser had committed an act of bankruptcy, claimed to treat that notice as a repudiation of the contract entitling him forthwith to rescind and treat the contract as at and end. Questioning the right of the vendor to thus rescind the contract, Harmon J. observes at p. 912:

"I am unable to agree that a vendor ought to be allowed to treat an act of bankruptcy before the date of completion as an anticipatory breach entitling him immediately to repudiate or to wait for the day fixed for completion and then treat the contract as though time were of its essence, failure to complete on that day entitled the vendor immediately to rescind".

This being the true position and time not being the essence of the contract, I am unable to see how the plaintiff could be refused specific performance for not having deposited the amount into court earlier which is the requirement which the learned District Judge appears to demand in this case.

(11) Mr. A. Sundaram Aiyar, learned counsel appearing for the respondent-defendant, contended that specific performance was a discretionary relief and that since the time of the contract the value of the property has risen considerably, this court will not interfered with the discretion of the lower appellate Court. For one thing there has been no such specific exercise of discretion in this case by the learned District Judge. Secondly this is a case where the learned District Judge has set aside the decree for specific performance given by the court of first instance. But leaving aside these considerations, what has to be considered is the fairness of the contract at the time the agreement was entered into. That since the contract, prices of properties have gone up is not a matter for consideration. In Sankaralinga v. Ratnaswami, , a similar contention is met thus:

"It remains to consider whether the respondents could claim to be relieved from their obligation to perform the contract under Section 22(2), Specific Relief Act. It is argued that as the price of the properties had risen to Rs. 20,000 according to the plaintiff and Rs. 30,000 according to the defendants, it would work a great hardship on the defendants such as they could not have foreseen and that therefore the court had a discretion to refuse specific performance. With reference to Section 22(2) it is well settled that the question of hardship must be judged as on the date of the transaction and not in the light of the subsequent events and that further the hardship should be one collateral to the contract and not in relation to a term of the contract such as the quantum of consideration".

(12) The following passage from Fry on Specific Performance, 6th Edn. page 199 is quoted:

"The question of the hardship of a contract is generally to be judged of at the time at which it is entered into. If it be then fair and just and not productive of hardship, it will be immaterial that it may, by the force of subsequent circumstances or charge of events, have become less beneficial to one party, except where these subsequent events have been in some way due to the party who seeks the performance of the contract. For whatever contingencies may attach to a contract, or be involved in the performance of either part, have been taken upon themselves by the parties to it. It has been determined that the reasonableness of a contract to be judged of at the time it is entered into, and not by the light of subsequent events and we have already seen that the same principle applies in considering the fairness of a contract."

(13) In Badruddin v. Tufail Ahemd . the principle is stated thus:

"But, our view is that the question of rise in prices at a point of time subsequent to the date of making of a contract is totally irrelevant and cannot furnish any basis for refusing the relief of specific performance. If the transaction was for proper consideration at the time it was entered into and the value of the property had considerably risen subsequently, that does not affect the enforceability of the contract."

It must be noticed that in this case the defendant on the date she gave her deposition was ready and willing to convey the properties on payment of the balance of the consideration. The plea of hardship now put forward is totally untenable. No other defence is put forward to the grant of the relief for specific performance.

(14) In the result, it follows that the second appeal has to succeed and the decree of the trial court has to be restored. As the plaintiff rushed to the court even before the time originally fixed had passed by, without any demand on the defendant, this is a fit and proper case where the plaintiff should pay the defendant her costs in the trial court and bear his own costs there. So far as the costs in the lower appellate court is concerned, the parties shall bear their own respective costs. In this court, the plaintiff will be entitled only to the institution fee. It is stated that the consideration deposited in court had been withdrawn. The appellant-plaintiff is granted time for depositing the balance of the consideration amount till 15-4-1965. The second appeal is allowed accordingly. Leave granted.

(15) Appeal allowed.


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