1988 (3) TMI 448 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the transaction was really one of mortgage though apparently of sale in form.
2. Whether time was of the essence of the contract.
3. Whether it was the plaintiff who had committed breach by not being ready and willing to perform his part of the contract or whether it was the defendant who had committed a breach of contract.

Summary:

1. Whether the transaction was really one of mortgage though apparently of sale in form:
The Supreme Court concluded that the transaction in question was one of mortgage in essence and substance though it was clothed in the garb of a transaction of ostensible sale. The Court highlighted several factors: the identical sum of Rs. 7000/- for both the sale deed and the agreement to sell within 10 years, the long period of ten years for reconveyance, the plaintiff continuing in possession on payment of rent equivalent to 13.5% interest, and the property not being mutated to the defendant's name. The Court noted that the real intention of the parties was to create a mortgage, but as the plaintiff sought specific performance rather than redemption, it was unnecessary to delve further into this aspect.

2. Whether time was of the essence of the contract:
The Court observed that the defendant did not assert that time was of the essence of the contract in his written statement or evidence. The law is well-settled that in transactions of sale of immovable properties, time is not the essence of the contract. The Courts below erred in holding otherwise, contrary to the law declared by the Supreme Court in Govind Prasad Chaturvedi v. Hari Dutt Shastri. The Court emphasized that neither the terms of the agreement nor the conduct of the parties indicated that time was treated as essential.

3. Whether it was the plaintiff who had committed breach by not being ready and willing to perform his part of the contract or whether it was the defendant who had committed a breach of contract:
The Supreme Court found that the trial court erred in concluding that the plaintiff was not ready and willing to perform his part of the contract based on an adverse inference drawn from the non-production of a passbook, which was neither requested by the defendant nor ordered by the Court. The Court also noted that the defendant did not specifically deny receiving the notice and telegram sent by the plaintiff. The defendant's claim of being present at the Sub-Registrar's office on the stipulated date was inconsistent with his earlier stand of not receiving any notice. The evidence indicated that the defendant was not ready and willing to perform his part of the contract and had deliberately abstained from remaining present at the Sub-Registrar's office. The Court concluded that the plaintiff had done everything in his power to perform his part of the contract, and the defendant's refusal to comply constituted a breach.

Judgment:
The Supreme Court set aside the judgments of the trial court, the Lower Appellate Court, and the High Court, and decreed the suit in favor of the plaintiff. The plaintiff had already deposited Rs. 10,000/- in the Court, out of which Rs. 7000/- was to be paid to the defendant for executing the sale deed. The defendant was directed to execute the sale deed within six months, failing which an official of the court would execute it. The appeal was allowed, and there was no order regarding costs throughout.