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Tapan Kumar Chatterjee Vs. Kalyani Debi - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberC.R. No. 1476 of 1983
Judge
Reported inAIR1985Cal243,89CWN27
ActsSpecific Relief Act, 1963 - Section 28
AppellantTapan Kumar Chatterjee
RespondentKalyani Debi
Appellant AdvocateRanajit Kumar Banerjee and ;Abhijit Banerjee, Advs.
Respondent AdvocateMoni Ghosh and ;S.P. Roy Chowdhury, Advs.
DispositionRevision allowed
Cases ReferredSaraswati v. Somasundaram
Excerpt:
- .....decree now under consideration should be interpreted as a composite decree. it is a preliminary decree decreeing the claim for specific performance but in case of default in the matter of payment of the balance consideration it is really a final decree rescinding in substance the contract itself. 15. such a contention cannot be accepted for two reasons. in the first place, as pointed out earlier, the statute (vide section 28) contemplates a default and provides for extension of time in an appropriate case. if the court passes a final decree rescinding the contract anticipating a default, then the plaintiff would lose the relief by way of extension of time provided by the statute even where he could otherwise establish a good case for such relief. secondly, under sub-sections (1) and.....
Judgment:

Anil K. Sen, J.

1. This revisional application raises a short point as to whether and how far a court which had granted a decree for specific performance of an agreement for sale of immovable property on payment of the balance consideration within a time specified, can subsequently extend the time for payment of such balance consideration. There is some divergence in the judicial opinion on the point and, as such, it requires very careful consideration.

2. The plaintiff/petitioner instituted Title Suit No. 67 of 1979 for specific performance of an agreement for sale of an immovable property against the defendant/opposite party. The suit was dismissed by the learned Subordinate Judge but succeeded on an appeal, being Title Appeal No. 389 of 1982 before the learned Additional District Judge, 3rd Court, Alipore. On March 25, 1983, the learned Additional District Judge in decreeing the plaintiffs suit directed the plaintiff to deposit the balance of the consideration money to the extent of Rs. 1,000/-(the total consideration being Rs. 10,000/-) within a month from that date. The decree further incorporated a default clause to the effect : 'In the event of the plaintiffs default in depositing the balance of the consideration money within a month from this date, that is, 25-3-1983 the plaintiff's claim for specific performance shall be barred for ever.

3. The plaintiff could not deposit the said sum of Rs. 1,000/- within the time so specified and in the meantime the defendant filed an application for review which was registered as Misc. Case No. 3 of 1983. According to the plaintiff, he, being served with the notice of the application for review, came to know of the aforesaid direction for deposit of the balance consideration within a month from the date of the decree and he was neither informed by his lawyer nor had any previous knowledge of such a direction, hence on May 12, 1983, he filed an application for extension of time for depositing the balance consideration.

4. This application was hotly contested by the defendant/opposite party and has been dismissed by the learned Additional District Judge by an order dated June 3, 1983, which is the subject matter of challenge in this revisional application. The learned Additional District Judge dismissed the application for extension of time solely on the ground that the time having been specified in a conditional decree, the decree became final on the expiry of the time and, as such, the court had no further jurisdiction to entertain such an application. It was further held that the default not being due to any fault on the part of the court, the court cannot go behind the conditional decree which has since attained finality. Reliance having been placed on the two decisions of the Supreme Court in the cases of Mahanth Ram Das v. Ganga Das, : [1961]3SCR763 and K. Kalpana Saraswati v. P. S. Somasundaram, : [1980]2SCR293 , the learned Additional District Judge distinguished the said decisions of the Supreme Court on the ground that the principles laid down therein can have no application in the case of conditional decrees and he relied on certain decisions in that regard including a single Bench decision of the Bombay High Court in the case of Bhujang Rao v. Shes Rao, : AIR1974Bom104 . That is the order which is being challenged before us in the present revisional application on behalf of the plaintiff.

5. Mr. Ghosh appearing on behalf of the defendant/opposite party in supporting the view taken by the learned Additional District Judge has again relied on two Bench decisions of this court, namely, Bhutnath Das v. Sahadeb Chandra Panja, : AIR1962Cal485 and Bokaro and Ramgarh Ltd. v. State of Bihar, : AIR1965Cal308 . It may be pointed out here and now that the decision in Bhutnath's case materially supports the view taken by the learned Additional District Judge.

6. Mr. Banerji appearing in support of the present revisional application has strongly contended that in a suit for specific performance the decree that is passed at the initial stage is a preliminary decree so that the court does not lose control or jurisdiction over the suit on the passing of such a decree whatever be the terms thereof. According to Mr. Banerji, such a decree should not be equated with other conditional decrees where the suit attains finality on non-fulfilment of a condition which is made condition precedent by the decree so that the court loses all further control over such a suit. Accordingly it is contended by Mr. Banerji that the learned Additional District Judge could very well entertain the plaintiff's application for extension of time for depositing the balance consideration. Referring to and relying upon the terms of Section 28 of the Specific Relief Act, 1963, it has been contended by Mr. Banerji that such a power is always inherent in a court passing a preliminary decree in a suit for specific performance which can never be abrogated. Mr. Banerji in his turn has relied on certain decisions to which reference will be made as and when we consider them hereinafter. The points raised by Mr. Banerji have been contested by Mr. Ghosh. According to Mr. Ghosh whether a decree is preliminary or final would depend upon its terms. According to him when a decree incorporates a default clause of the nature now under consideration and such a clause has come into effect, the suit reaches finality and the court ceases to possess any more jurisdiction to alter the terms except by way of review.

7. Privy Council in the case of Ardesher Mama v. Flora Sassoon, 55 Ind App 360 : (AIR 1928 PC 208) pointed out that the Specific Relief Act, obviously referring to the Act of 1877, should be interpreted in the light of the principles recognised by English courts both as regards the substantive law as also the practice. Review of English law clearly indicates that the courts recognised two basic principles with regard to suits for specific performance. The first of these principles is that passing of a decree does not terminate the suit and various reliefs can yet be obtained even after the judgment. The second principle so laid down is that such a decree enures to the benefit of both the plaintiff and the defendant. As early as in the year 1888 this court in the case of Peari Sundari Dasi v. Hari Charan (1888) ILR 15 Cal 211 clearly held that the court retains control over the proceedings even after a decree for specific performance has been passed, that the decree passed in a suit for specific performance is not a final decree and that the suit must be deemed to be pending even after the decree. Such a view received wide approval by different High Courts and it would be wholly unnecessary to refer to a lot of decisions on the point since the Supreme Court in the case of Hungerford Investment Trust Limited v. Haridas Mundhra, has expressly approved the said view. Thus it may be accepted as a settled principle that the decree which the court passes at the initial stage is in the nature of a preliminary decree or to be more specific not final in character leaving ample jurisdiction in the court to pass appropriate orders that may be necessary in such a suit.

8. It may be pointed out that the MadrasHigh Court in the case of Abdul Shaker Shahibv. Abdul Rahiman Sahiab, AIR 1923 Mad 284considered the point and both the learned ChiefJustice and Wallace, J., constituting the Benchagreed in holding that in a decree for specificperformance the time to make payment of thepurchase money should never be made a condition for continuance of the right under the judgment. It was held as such following theprocedure followed by the English courts whichhad not been abrogated by the English statute. This decision too received wide approval bydifferent High Courts including this court inthe case of Abdur Rahim Molla v. Tamijuddin,AIR 1933 Cal 580 and was followed in a subsequent decision of the Madras High Courtin the case of Md. Ali Saheb v. Abdul Quadir Saheb (1930) 59 Mad LJ 351 which again hadbeen approved by the Supreme Court in thecase of Hungerford Investment Trust Limited(supra).

9. Though some of these decisions were cited before the Division Bench in the case of Bhutnath v. Sahadeb : AIR1962Cal485 (supra), the real aspect of the law relating to passing of decree in a suit for specific performance did not receive consideration by the learned Judges. The two Madras cases cited above more distinguished on the ground that in neither of them the decree incorporated any condition that on the failure to make the deposit within the time specified in the decree the suit would stand dismissed. A decision of the Nagpur High Court in the case of Gokul Prosad v. Fatelal ILR (1945) Nag 924 : (AIR 1946 Nag 29) where there was such a condition was disapproved with the observation that matters dealt with judicially and disposed of by a preliminary decree become final and the court loses its jurisdiction to make any other order in respect of such matters. It, however, appears to us that pointed attention of the learned Judges was not drawn to the basic principles laid down by the Madras High Court in those two decisions. The decisions were not rendered merely with reference to the terms of the decree. On the other hand, the court was firmly laying down the rule that in disposing of a suit for specific performance the court should never foreclose its jurisdiction to make appropriate orders after the decree by making the limit of time for payment of purchase money a condition for continuance of the right under the judgment. The learned Chief Justice observed : 'Specific performance is ah equitable remedy which has been owned and used by the courts of Chancery in England for centuries and appropriate forms of judgment have been approved by the learned Equity Judges in England and have now become almost stereo-typed : and those at present in use will be found set out in section on judgment under the title Specific Performance. On a perusal of them the first thing to be observed is that not one of those forms contained in the first instance a limit of time for payment of purchase money and not one attempt to make payment of the purchase money by a certain date a condition of the continuance of the rights under the judgment.' Wallace, J. in agreeing with the learned Chief Justice observed as follows: 'It is clear as the learned Chief Justice has shown, that it must he within the power of the court to vary the time within which the contract shall be performed, as difficulties may arise through no fault whatsoever of the parties preventing performance within the time specified in the decree.' When such was the principle which was laid down by the Mardas High Court in those decisions, in our opinion it would not be just and proper to distinguish those decisions merely having regard to the particular terms of the decree there under consideration. The decision did not rest on the terms of the decree but went further when it was made to rest upon the basic principles with regard to passing of a decree in a suit for specific performance at its initial stage.

10. Looking at the substance there is no real distinction between an initial decree passed in a suit for specific performance decreeing the claim and directing deposit of the balance consideration within a time specified and a decree as now under consideration incorporating a further default clause, because if the time is fixed by the decree and if the court has no power to alter the decree after it is passed except by way of review, it will not have the power to extend the time irrespective of whether the decree incorporates the default clause as now under consideration or not. Therefore, in our view the Madras decisions as aforesaid and a decision which follows the same cannot be distinguished in the manner they were so distinguished in Bhutnath's case : AIR1962Cal485 . On the other hand, it being well settled by now that such a decree is a preliminary decree except for issues finally decided therein for passing such a decree, the court still retains ample control over the suit. The court no doubt can fix a time limit for discharge of mutual obligations by the parties but those prescriptions are never so peremptory that they cannot be subsequently altered under any circumstances. The prescription as to time does not really constitute a substantial part of the decree and as such, a condition for the decree so that the default clause based thereon does not make it a conditional decree. In the case of Kartick Chandra Pal v. Dibakar Bhatiacharya, : AIR1952Cal362 , Mukharji. J, in a decision by a Division Bench pointed out that 'By the decree for specific performance, the court sets out what it finds to be the real contract between the parties and declares that such a contract exists.' The rest is left for subsequent implementation by the court including execution thereof. This decision, in our opinion rightly points out the essence of the initial decree passed in a suit for specific performance so that all other directions are merely incidental and are never made conclusive by the decree. This observation of Mukharji, J, was expressly approved by the Supreme Court in the case of Babulal v. Hazarilal, : [1982]3SCR94 .

11. Such a conclusion again follows from the provisions of the Specific Relief Act and has since been made amply clear by the subsequent alteration of the provisions of that Act. Under Section 35 of the Specific Relief Act, 1877. where the purchaser has failed to pay the balance consideration in terms of the decree, the vendor had an option of bringing a separate suit for rescinding the contract or to apply for such rescission in the same suit. When such an application was to be filed it was not obligatory for the court to direct such rescission as a matter of course because of the default. The material part of the provision prescribed : 'The court may ..... rescind the contract so far as the party in default or altogether as the justice of the case may require.' Ample discretion, therefore, was left with the court and the court was empowered to condone the default and extend the time for payment Such power was recognised by this court in the case of Peari Sundari Dasi v. Hari Charan (1888 ILR Cal 211J (supra) and Anandi Lal Poddar v. Gunendra Kumar Ray, : AIR1966Cal107 . Such power was also recognized by the Madras High Court in the case of Md. Ali Saheb v. Abdul Khadir (1930) 59 Mad LJ 351) (supra). All these decisions were expressly approved by the Supreme Court in the case of Hungerford Investment Trust (supra).

12. The law had since then been materially changed by the new Specific Relief Act, 1963. Now a separate suit for rescission of the contract based on such a default being barred under Section 28(4), Section 28(1) provides for rescission in the same suit along with consequential reliefs under Section 28(2). It is significant to note that what the judicial decisions earlier recognised, namely, power of the court to condone the breach and extent the time fixed by the initial decree for payment of the balance consideration has now been incorporated expressly in Section 28(1) of the new Act. Hence, there can no longer be any doubt about the existence of power in the court to extend the time for payment as fixed by the initial decree. Recognising the initial decree to be a preliminary decree, the legislature expressly provided that the time specified therein can never be so peremptory that it can admit of no alteration under any circumstances.

13. In our view if the law with regard to decrees in suits for specific performance be as such, then it will be difficult to accept the position that in disposing of such a suit the court can by passing a conditional decree oust its own jurisdiction. As pointed out earlier under the amended provisions of Section 28 of the new Act, an independent suit for rescinding the contract by the vendor on the ground of such default on the part of the purchaser is otherwise barred; he is required to seek rescission in the very suit and in such proceeding for rescission the court has ample power to extend the time and relieve the plaintiff of the default where such relief is sought for on just ground so that the court cannot on the terms of its decree oust its jurisdiction either to grant such extension or to deprive the vendor of a relief to which he is otherwise entitled to. Such an act would really be ultra vires the court's power because no court can foreclose its jurisdiction conferred by the statute. In such a situation the court's power to grant an extension under Section 28(1) of the Act, will be rendered nugatory. [See Chinnamarkathian v. Ayyavoo, : [1982]2SCR146 and Saraswati v. Somasundaram (1977) 2 Mad LJ 68, the latter decision having a direct bearing on the point.] Necessarily, therefore, it should be held that in all cases where a condition is imposed such condition is never so peremptory as to actually take away the jurisdiction of the court. In our view, such a condition when imposed must be interpreted in the same manner as in the case of Mahanth Ram Das v. Ganga Das, : [1961]3SCR763 to be in essence an order in terrorem not intended to divest the court of its power to pass other consequential orders including an order for extension of time expressly conferred by the statute. In our opinion, Mr. Banerji, therefore, is right in contending that such decrees when passed in a suit for specific performance should not be equated with other conditional decrees because at the initial stage a suit for specific performance can never be disposed of finally except where it is dismissed on a finding that there is no contract which can specifically be enforced in law.

14. Drawing inspiration from certain observations in Bhutnath's case : AIR1962Cal485 it has been contended by Mr. Ghosh that the decree now under consideration should be interpreted as a composite decree. It is a preliminary decree decreeing the claim for specific performance but in case of default in the matter of payment of the balance consideration it is really a final decree rescinding in substance the contract itself.

15. Such a contention cannot be accepted for two reasons. In the first place, as pointed out earlier, the statute (vide Section 28) contemplates a default and provides for extension of time in an appropriate case. If the court passes a final decree rescinding the contract anticipating a default, then the plaintiff would lose the relief by way of extension of time provided by the statute even where he could otherwise establish a good case for such relief. Secondly, under Sub-sections (1) and (2) of Section 28 of the new Act of 1963, the vendor in a suit for specific performance is not only entitled to an order rescinding the contract in case of default in payment of balance consideration by the purchaser but also to other ancillary reliefs. The court cannot by passing such a composite decree merely rescind the contract and render itself functus officio for granting the other ancillary reliefs. On the scheme of the provision, no such composite decree can be contemplated.

16. The view we are taking is not wholly consistent with the earlier Bench decision of this court in Bhutnath's case : AIR1962Cal485 nor is it wholly consistent with the Bombay view in the case of Bhujang Rao v. Shes Rao, : AIR1974Bom104 , and the earlier decision of the Bombay High Court referred to therein. We are fully conscious of the position that the decision in Bhutnath's case is the decision of a Division Bench consisting of two eminent Judges whose judgments are always held by us in high esteem and, as such, we would have normally referred the matter to a larger Bench instead of expressing ourselves in the manner we have done but for two intervening developments. Firstly, the view to the contrary as clearly expressed by the Madras High Court in the case of Saraswati v. Somasundaram (supra) has been approved by the Supreme Court in an appeal arising out of a consequential order passed therein in the case of Saraswati v. Somasundaram, : [1980]2SCR293 . In that case, the trial Judge in decreeing the suit for specific performance prescribed a time limit for payment of the balance consideration and incorporated a default clause to the effect that in default the suit will stand dismissed. On an appeal by the purchaser the Division Bench of the Madras High Court vacated the default clause on the view that the court had no jurisdiction to impose such a default clause in the decree for specific performance making the prescription as to time peremptory. Even thereafter the purchaser having failed to pay the balance consideration, the contract was rescinded on an application by the vendor and the purchaser's prayer for extension of time was dismissed on its merits. On a further appeal to the Supreme Court, the Supreme Court allowed the purchaser's prayer for extension and reversed the High Court's decision to rescind the contract. The Supreme Court, therefore, approved and upheld the earlier decision of the Division Bench vacating the default clause as one not within the jurisdiction of the court to impose at the time of passing the initial decree in a suit for specific performance. Secondly, the law on the point has since been changed from what it was at the time Bhutnath's case : AIR1962Cal485 was decided. The legislature has now conferred express powers to grant relief in case of default by the purchaser in the matter of payment of balance consideration and extend the time when fixed by the initial decree. Such legislative change in our view cuts at the very foundation of the decision in Bhutnath's case. In the other case relied on by Mr. Ghosh viz, Bokaro & Ramgarh/Ltd. : AIR1965Cal308 (supra), the court was not called upon to consider a point with regard to decrees in suits for specific performance as now under consideration by us. Though Bhutnath's case was referred to, it was so referred to for considering the ordinary cases of conditional decrees. We have already pointed out the distinction between such conditional decrees and decrees in a suit for specific performance. Hence we do not think that the said decision stands in our way.

17. We are, therefore, of the opinion that the learned judge in the court of appeal below refused to exercise a jurisdiction vested in him upon a misapprehension that he had lost such jurisdiction in view of the condition incorporated in the initial decree. There he being in error, we are unable to sustain the order impugned before us. We, therefore, set aside the order and remand back the application for reconsideration by the learned Judge on its merits. Parties are given liberty to apply for trial on evidence for adjudication of the question as to whether the plaintiff makes out any sufficient cause for extension of the time for payment of the balance consideration as fixed by the initial decree. Once the court allows such an application the court would further reconsider the plaintiff's application for adding a relief for recovery of possession which too has been dismissed only on the ground that as an effect of the default clause the court had lost all jurisdiction to entertain any such application.

18. In the result, the revisional application, therefore, succeeds and is allowed to the extent as above. There will be no order as to costs.

Prabir Kumar Majumdar, J.

19. I agree.


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