T. Ramaprasada Rao, J.
1. The first to the fourth defendants in. O.S. No. 298 of 1966 in the Court of the Subordinate Judge of Tiruchirapalli, are the appellants. The plaintiff, one C.S. Appavoo Udayar filed a suit for the specific performance of a contract under which the first defendant purported to convey the suit property for a sum and consideration of Rs. 11,500. The plaintiff also sought for re-delivery of possession of the suit properties and for a direction as against the first defendant to account for the mesne profits ever since the date he was dispossessed of the properties to the date of actual re-delivery of possession. The relevant facts which led to the institution of the suit for specific performance of 3rd October, 1966 are as follows:
2. Under Exhibit A-1, dated 2nd May, 1962 the plaintiff mortgaged certain properties not covered by the suit. It was discovered that the plaintiff did not have any title to such properties. Consequent upon such a mis-conduct and mis-representation on the part of the plaintiff, and as the first defendant's security was in jeopardy, he gave a complaint to the police for cheating as against the plaintiff, under Section 420, Indian Penal Code. Thereafter, the parties adjusted their serious differences in and by which the plaintiff agreed to execute a sale deed over the suit properties and did execute the sale deed under Exhibit A-3, dated 4th January, 1964 for a sum and consideration of Rs. 10,000. This document was registered as document No. 259 on 21st April, 1964. It may be of interest to note that consequent upon the adjustment of differences as above outside Court, the criminal case by then laid by the first defendant as against the plaintiff was dismissed and the plaintiff was discharged on 31st December, 1963. It is common ground that during the period of negotiations as above the necessary stamp papers for the sale of the suit properties by the plaintiff to the first defendant were purchased on 22nd and 31st of December, 1963. Though the sale deed was executed on 4th January, 1964 under Exhibit A-3, it was registered contemporaneously with another agreement Exhibit A-4, dated 8th January, 1964 in and by which the first defendant agreed to sell back the suit properties within one year from the date of execution of the sale deed Exhibit A-3. It is not in dispute that the plaintiff never made it appear that he was interested in the re-purchase of the property during the period of one year which was the period agreed upon for the reconveyance of the property by the first defendant to the plaintiff. As within the period contemplated for purchase under Exhibit A-4 the plaintiff did not seek for a reconveyance thereof, the first defendant sold the suit properties under Exhibit A-7, dated 29th November, 1965 to defendants 2 to 4, who thereafter transferred the properties in favour of the 5th and 6th defendants. The plaintiff's case as pleaded in the Court below is that the sale deed Exhibit A-3 is not a sale at all and if at all one it is void under Sections 23 and 16 of the Contract Act. His case is that he was coerced and compelled to execute the sale deed and he had not the necessary intent to convey title thereunder. In any event he would aver that the term of one year provided for the reconveyance of the property under Exhibit A-4 is not the essence of the contract and even the terms of Exhibit A-4 literally interpreted would only give the impression that it is an agreement to convey immoveable property which was the subject-matter of an earlier sale and not an agreement to reconvey. As in the case of contracts to convey immoveable property, time is never understood as the essence of the bargain, the first defendant cannot escape the legal liability to sell the property in accordance with the terms of Exhibit A-4 and that his later dealings under Exhibit A-7 whereby he conveyed the property to defendants 2 to 4, who in turn transferred the same to defendants 5 and 6 are inoperative and not binding on the plaintiff. It is said that the plaintiff was dispossessed from the properties on 4th April, 1966 and in that view all the defendants are liable to render an account for the mesne profits. The plaintiff admits that the first defendant did sell the properties under Exhibit A-7 to defendants 2 to 4 and that he objected to the registration of the documents executed by the first defendant in connection with the sale of the suit property by him to defendants 2 to 4. The plaintiff avers that he is ready and willing to deposit into Court the agreed sum of Rs. 11,500 as per the agreement Exhibit A-4, dated 8th January, 1964, and claims the usual decree for specific performance.
3. The defendants on the other hand would aver that the sale Exhibit A-3 is fully supported by consideration, as the recitals therein disclosed that there were pre-existing debts of the plaintiff which were paid off and discharged from and out of the sale consideration. The case of the plaintiff that the sale deed had taken place by misrepresentation and fraud and in order to stifle prosecution is denied. The first defendant expressly denies that he is guilty of any flagrant breach of trust nor has he abused the confidence alleged to have been placed in him by the plaintiff. The first defendant's case is that he let in the plaintiff's son as his lessee of the suit properties soon after the purchase and had to institute proceedings before the Revenue Court to evict him from the suit properties as he failed and neglected to pay the rent payable to the first defendant as lessee and that it was in such proceedings that he took possession of the properties on 4th April, 1966 from the plaintiff s son. The first defendant reiterates that his sale of the properties under Exhibit A-7 to defendants 2 to 4 and the dealings by them thereafter by which they transferred the, properties to defendants 5 and 6, are all independent transactions which cannot be questioned or challenged by the plaintiff. The first defendant states that under Exhibit A-4 which was a document contemporaneously 'registered along with Exhibit A-3 the plaintiff acquired only a right of reconveyance and not a right to convey as alleged and in these circumstances, the demonstrable intention between the parties was that time prescribed under Exhibit A-4 for such re-purchase should be the essence of the contract. As the plaintiff did not seek for any such reconveyance within the year, nor has he called upon the first defendant to execute such a deed of reconveyance within the time prescribed, the plaintiff has lost his right to seek for specific performance and that, therefore, the suit is misconceived.
4. On the above material pleadings the following issues were framed.
1. Was the deed, dated 4th January, 1964 by the plaintiff in favour of the 1st defendant not an out and out sale?
2. Is the plaintiff entitled to get reconveyance of the suit properties for all or any of the reasons stated in the plaint?
3. Are the defendants 2 to 6 bona fide alienees entitled to protection?
4. Is the plaintiff entitled to rendition of accounts?
5. Is the suit barred by limitation?
6. To what relief, if any, is the plaintiff entitled?
(Additional Issues framed on 6th July, 1968.)
Is the suit not properly valued?
5. The learned Judge held that the first defendant did acquire a valid marketable title to the suit properties under Exhibit A-3, and that it was not vitiated by misrepresentation, fraud or coercion as alleged by the plaintiff and it is not hit either by Section 23 or Section 16 of the Contract Act. On issue 2, he found that the plaintiff was entitled to get the conveyance of the suit properties from the defendants, as, on a literal reading of Exhibit A-4, the learned Judge was of the view that Exhibit A-4 cannot be understood or interpreted as an agreement of reconveyance but only as an agreement of conveyance. He found that defendants 2 to 4, are not bona fide alienees of the suit properties and that they are not entitled to any protection by reason of the purchase of the suit properties under the registered document Exhibit A-7, dated 29th November, 1965. He held that the suit for specific performance was not barr by limitation and found issue 4 regarding the rendition of accounts in favour of the plaintiff. He agreed with the plaintiff that the suit for specific performance has been properly valued and in the result, he passed the usual decree for specific performance directing defendants 1 to 4 to execute a registered sale deed in respect of the suit properties in favour of the plaintiff and gave incidental directions to the plaintiff to deposit the agreed amount into Court to enable him to obtain the reconveyance. The usual default clause was provided for. He also gave a direction to defendants 1 to 4 to render an account to the plaintiff for the profits derived from the suit properties from the date of dispossession, namely 4th April, 1966 till the date of delivery of possession. Certain consequential reliefs were also given in favour of the plaintiff whereby the dealings inter se as between defendants 1 to 4 on the one hand and defendants 5 and 6 on the other, were rendered invalid. It is as against this judgment and decree that the present appeal has been filed.
6. Mr. T.R. Ramachandran, Learned Counsel for the appellants wants us to consider the entirety of the circumstances instead of solely relying upon the words and content of Exhibit A-4 to apprise the situation. According to him the expression used in Exhibit A-4 has to be read in conjunction with the conduct of the parties and particularly that of the plaintiff and his son. He would also refer to the oral evidence let in, and particularly the silence of the plaintiff during the period of one year provided for under Exhibit A-4 and urge that what was in contemplation, of the parties was an agreement of reconveyance and not an agreement of conveyance. According to him the privilege gained by the plaintiff by reason of the above re-purchase has become extinct with the lapse of the period of one year and he cannot on out of place considerations seek for specific performance of a contract which has become extinct after efflux of the prescribed time. Though the words do not find a place in Exhibit A-4, the legal right secured by the plaintiff under Exhibit A-4 has to be understood along with the surrounding circumstances of the case. Contending contra, the Learned Counsel for the respondent would urge that the suit agreement Exhibit A-4 should be considered as an agreement which is independent of the sale under Exhibit A-3 and in the absence of the expression reconveyance in the agreement to convey, the Court should not stretch the legal effect of the documents so as to find a case in favour of the appellants. Relying on the well-known principle that a document has to be construed on its own terms and as Exhibit A-4 is an agreement of sale and not an agreement of re-sale the occasion to consider contemporaneous facts does not arise. In effect, the Learned Counsel's argument is that having regard to the evidence both oral and documentary in this case the intention of the parties cannot be brought to bear on the reality of the situation and the plaintiff denied the right to secure the specific performance of the contract under Exhibit A-4.
7. It is no doubt true that in the matter of interpretation of documents Courts are guided primarily by the letter in which it is couched. The writing which produces the instrument often takes precedence in the matter of the understanding of the true meaning of the document But a well set exception is always carved out to this accepted norm. If such an instrument is contemporaneous in point of time with other documents and if these two sets of documents have been under stood and acted upon by parties in a particular manner, then even though, the letters and writing of such document may prima Jade give a particular meaning to it, yet the same has to be in conjunction with such contemporaneous documents and be, interpreted in the light of the subsequent conduct of the authors of the said documents. The best and the surest mode of construing an instrument is to read in the sense which would have been applied when it was drawn up. Though this principle contemporance expositio est optima Fortissima in Lege cannot, as a matter of course, be adopted in the interpretation of statutes by referring to contemporaneous events which led to the passing of the statutes yet the intention of the parties, when they wrote a document, which is in the midst of other documents, might be gathered and further elucidated by the conduct they have pursued. As has been said by modern authorities, 'the rule appears to be that, however general the words of an ancient grant may be, it is to be construed by evidence of the manner in which the thing granted has always been possessed and used; for so the parties thereto trust be supposed to have intended.'
8. As each case has to be decided on its own facts, it cannot be laid down with precision that the language deployed in an instrument should govern in all circumstances and for all times notwithstanding the fact the parties who had occasion to refer to it intended that it should be understood in a specified way. If there is such evidence of supervising conduct by the parties, then notwithstanding the express nature of the words used in an instrument, such surrounding circumstances might be taken into consideration in order to understand the legal effect of the word used by the parties in the instrument,
9. The Learned Counsel for the respondent referred to the decision in Pandit Ghunchun Jha v. Sheikh Ebadan Alin and Anr. : 1SCR174 . The principle laid down by the Supreme Court in the above decision is unassailable. The Supreme Court said:
If the words are express and clear effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. If however there is ambiguity in the language employed then it is permissible to look to the surrounding circumstances to determine what was intended.
In the instant case the parties having used the words under stood the same as This later understanding of the meaning and purpose of Exhibit A-4 cannot be lightly brushed aside. The first defendant filed a petition before the Revenue Court, Tiruchirapalli, for eviction, of the plaintiff's son who defaulted in the payment of rent of the suit lands which were leased out by the first defendant after purchase tinder Exhibit A-3. This was nearly a year after the purchase. The plaintiff's son set out the circumstances under which the sale Exhibit A-3 was executed and would say in Exhibit B-3 as follows:
In pursuance of the said arrangement this respondent's father executed a sale deed in favour of the petitioner on 8th January, 1964. On the same date the petitioner executed an agreement in favour of this respondent's father agreeing to reconvey the property on payment of Rs. 11,500 within a year.
The plaintiff would own the contents of Exhibit B-3 and would swear that it was he who conducted the said proceedings with the assistance of his own lawyers. He would clearly say that he engaged the lawyer Mr. Sankara Iyer in the Revenue Court and instructed him to file the counter which was filed by his son. Again the plaintiff had an opportunity for a second time to clearly set out what was the intention of the parties when Exhibit A-4 was entered into Exhibit A-8 is a statement of objections filed before the Sub-Registrar of Assurances, Tiruchirapalli at a time when the first defendant was selling the suit properties, to the second to the fourth defendants under Exhibit A-7. In that statement Exhibit A-8 the plaintiff stated as follows:
The said N. Mangalam Pillai has entered into an agreement with me on 8th January, 1964 for re-sale of the said property in my favour and I am ready and willing to purchase the same. Any sale in favour of...third parties will not be binding on me. Hence I object to the registration of any sale deed in respect of the above property by N. Mangalam Pillai.
Here again, the plaintiff understood that Exhibit A-4 was an agreement of re-sale. He refers to Exhibit A-8 in his evidence. He had legal advisers even at this stage. According to him Exhibit A-8 was presented by his Vakil on his instructions. Even in his chief examination he uses the word as the basis of the agreement under Exhibit A-4. According to him the parties understood Exhibit A-4 thus:
The Learned Counsel for the respondent explains away the above situations and statements by interested persons including the plaintiff by stating that they would not have understood the implication of the term or reconveyance. We are unable to accept this explanation. The course of conduct of parties, who could speak on Exhibit A-4, its intent and purpose, reaffirms the obvious in Exhibits B-3 and A-8. They accept that the only intention of the parties, when Exhibit A-4 was executed, was that the suit properties had to be reconveyed within a year, if the plaintiff were to pay off the agreed consideration. The plaintiff cleverly explained away in the witness box that what was agreed to in Exhibit A-4 was an independent agreement of sale and it had no nexus to the primary sale and it did not result in an agreement for re-sale. Reference is also made by counsel to a decision of the Karnataka High Court in. Prem Agnani v. Sub-Registrar, Bangalore : AIR1975Kant1 , wherein the well known cardinal rule of construction that an instrument has to be considered as a whole and the intention of the parties has to be ascertained by the terms thereof and not by the extraneous circumstances or evidence has been reiterated. But in a case like the one before us, if the surrounding circumstances do form an integral part of one and the same transaction, then all such events put together are so knitted that we are constrained to examine the resultant fabric of such events to find out what the parties intended. The ambiguity in this case arises by necessary implication because the parties themselves at all material times understood Exhibit A-4 as an agreement of reconveyance and pot as an agreement of sale. We, therefore, agree with the Learned Counsel for the appellants that though the lettering of Exhibit A-4 prima facie gives the impression that it was an agreement of sale, yet the parties intended that it was an agreement of reconveyance. We may in passing refer to another fact which is also a pointer to our conclusion that both Exhibit A-3 and Exhibit A-4 were registered on the same date in the same office of the Sub-Registrar of Assurances.
10. The next question for consideration is whether the agreement of reconveyance as contained in Exhibit A-4 would enable the plaintiff to overlook the covenants therein and seek for specific performance of such a contract on the only ground that time cannot be the essence of a contract of a sale of immovable property. Admittedly, the suit for specific performance was filed on 3rd October, 1966, which is long after the agreed period during which the plaintiff could seek for specific performance of the contract of reconveyance. In all cases where the subject-matter of the bargain is immovable property, the accepted rule is that even if the parties agreed that such a contract should be performed within an agreed period of time, then such time would not be the essence of the contract. This being a well-accepted rule, authorities need not be cited. But even to this well known equitable doctrine, there is an exception. In cases where the parties contemplate, to reconvey property purchased by them and such an agreement of reconveyance is contemporaneous with the primary sale of the property, and if there is a stipulation in the agreement of reconveyance that certain things have to be performed within a certain, time and in accordance with certain stipulations, then such covenants including the stipulation, as to time has to be respected to the last letter, and equity will not interfere and extend its arm of sympathy by varying or modifying the express stipulations conditions and covenants of such a contract of reconveyance. In such cases, equity arrays itself with common law and enforces such agreements of reconveyance in accordance with its tenor and strict, conditions. The reason behind this leaning of equity towards the common law is but too clear. If a specific time is agreed upon under the terms of the reconveyance, within which the parties who could claim performance of such an agreement could claim it, then he can do so only within the prescribed time. The right to re-purchase is equitable to an option or a privilege granted to the vendor in the primary sale to seek for such reconveyance. As privileges cannot be gained at the whim and fancy of the grantee, he should be alert and seek for its performance. A prescription as to time in an agreement of reconveyance cannot be made elastic as by the end of the definite time fixed for its performance, there is an automatic lapsing of that privilege and the loss of the option in the grantee of the same. By reason of such a stipulation the title of the purchaser under the primary sale is kept in abeyance till the expiry of the period within which time the grantee of the privilege can obtain reconveyance of the property by seeking for specific performance of the agreement of reconveyance. This nebulous state of affairs in the title of the purchaser under the primary sale cannot be kept in abeyance for a length of time beyond the prescribed period of time agreed upon between the parties. This would result in the purchaser being asked to wait without justification and a look to the convenience of the grantee of the privilege to seek for specific performance of the agreement of reconveyance.
11. We shall now refer to the ratio in the appropriate cases touching upon the legal point under consideration. The Federal Court in Shanmugam Pillai v. Annalakshmi (1950) 1 M.L.J. 683 : 1950 S.C.J. 1 : (1949) F.C.R. 441 : A.I.R. 1950 F.C. 38, observed as follows:
The agreement reserved an option to A to repurchase the property and was in the nature of a concession or privilege on fulfilment of certain conditions with a proviso that in case of default the stipulation should be void. A not having paid the instalments punctually according to the terms of the contract the right to repurchase was lost and could not be specifically enforced. It was not in the nature of penalty and the Court had not power to afford relief against forfeiture for its breach.
A division. Bench of our Court in Balasundara v. Muthuvenkatachalam : AIR1954Mad799 observed that time must be and is of the essence of the contract where the parties have proceeded on the basis that there was a completed sale and a contemporaneous agreement to reconvey. In Simrathmull v. Nanjalingaiah : AIR1963SC1182 , the Supreme Court, after finding that the sale deed and the deed of re-conveyance were parts of the same transaction, observed thus:
It is true that equity relieves against penalties when the intention of the penalty is to secure payment of a sum of money or attainment of some other object, and when the event upon which the penalty is made payable can be adequately compensated by payment of interest or otherwise. Thus relief is granted in equity against the penalty is a money bond, and also against penal sums made payable on breach of bonds, covenants and agreements for payment of money by instalments, or for doing or omitting to do a particular act. But where under a contract, coveyance, or will a beneficial right is to arise upon the performance by the beneficiary of some act in a stated manner or at stated time, the act must be performed accordingly in order to obtain the enjoyment of the right, and in the absence of fraud, accident or surprise, equity will not relieve against a breach of the terms.
Lastly, in. Caltex v. Bhagwan Devi : 2SCR236 . The Supreme Court said thus:
At common law stipulations as to time in a contract giving an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed us conditions precedent. Equity followed the common law rule in respect of such contracts and did not regard the stipulation as to time as not of the essence of the bargain, the reason being that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege he must do so strictly within the time limited for the purpose...A delay on the part of the lessee to apply for renewal arising by mere neglect on his part and which could have been avoided by reasonable diligence will not entitle him to claim renewal.
It is, therefore, abundantly clear from the ratio in the above decisions that equity will not relieve against a breach of the terms of a contract for reconveyance of immoveable property contemporaneously entered into at the time when the primary sale was effected. Such an option or privilege which the beneficiary gains cannot be lightly treated by the grantee, to his advantage. In order to claim equity, a party should do equity. A party in default cannot, a fortiori, claim an equitable right and seek for the extension of the time for performance of the contract of reconveyance on equitable considerations. By reason of the agreement of reconveyance, he obtains a concession and in order to gain the concession he should not only be alert but should be diligent in claiming the entitlement.
12. In the instant case it is common ground that the plaintiff did not seek for the specific performance of the contract of reconveyance within a period of one year expressly stipulated for, as the time for such enforcement of the right under Exhibit A-4. He did not give the impression that he was ready and willing to perform his part of the contract within the stipulated time. There was no notice asking for such performance nor was there any offer made that he intends to obtain reconveyance of the properties. He knew when he objected under Exhibit A-5 that the first defendant was dealing with the properties to his prejudice. Exhibit A-7 was the deed of sale executed by the first defendant in favour of defendants 2 to 4 in November, 1965. The plaintiff ought to have filed the suit for specific performance at the latest by April, 1965. But he comes to Court nearly two years thereafter and does not afford any explanation for his indiligence and delay. He issues the suit notice Exhibit A-17 only on 20th April, 1966 which was replied to promptly by the first defendant under Exhibit A-18, dated 2nd May, 1966. Even then he waits for another five months to bring the action. This unexplained delay is another factor to be taken into consideration, while applying the common law rule stated above. We are, therefore, constrained to agree with the appellants that in the fact and in the circumstances of the case, Exhibit A-4 cannot be construed as an independent agreement of sale but is only an agreement of reconveyance which was entered into contemporaneously with the primary sale of the suit lands under Exhibit A-3 and that the plaintiff having not availed himself of the concessions or the privilege granted to him under Exhibit A-4 within the limited time, he has lost it and he cannot, therefore, seek for specific performance of that concession after the lapse of a year from the date of registration of Exhibit A-4 which is dated 21st April, 1964.
13. The lower Court found that the sale in favour of the first defendant under Exhibit A-3 was valid and that the sale was not vitiated by undue influence, coercion or fraud. We have already seen that the sale was agreed to long prior to the date when the plaintiff was discharged in the criminal case We agree with the other findings of the Court below but we differ from its finding in so far as it held that time was not the essence of the contract and that Exhibit A-4 is an independent agreement of sale and the plaintiff could seek for specific performance of the same in equity after a reasonable time. We reverse the decision of the Court below in so far as this aspect of the case is concerned and hold that time is of the essence of the contract of reconveyance (Exhibit A-4) and the plaintiff having failed to come to the Court within the agreed time, he has lost the right to seek for specific performance of the contract. In -the above view the subsequent sales made by the first defendant in favour of defendants 2 to 4 and the supervening transactions indulged in by defendants 2 to 4 in favour of defendants 5 and 6 cannot be challenged by the plaintiff. In consequence the defendants are not liable to account to the plaintiff for any period of time as was found by the Court below which direction followed the finding of the Court that the plaintiff could seek for specific performance even beyond the time prescribed in Exhibit A-4 as in equity he can seek for it. We, therefore, set aside the judgment of the Court below in so far as it held that the appellants are liable to account from 4th April, 1966 which is the date when the first defendant secured possession of the properties from the plaintiff's son as lessee thereof. We also hold that defendants 2 to 4 are bona fide purchasers for value without notice of any defect in the first defendant's title.
14. In the result, we hold that the plaintiff is not entitled to a decree for specific performance and dismiss the suit, but in the peculiar circumstances of this case we direct that the parties do bear their own costs in this appeal and in the lower Court.