2008 (12) TMI 778 - SC - Indian Laws

Maintainability of suit for enforcement of a contract on the part of the joint promisee - vendees and developers of the neighbouring plot fell apart disputes and differences having arisen amongst the vendees inter se. - compromise between the vendors and his co-vendee - principle of novation of contract - High Court reversed the judgment and decree of the Additional Subordinate Judge - HELD THAT - Admittedly the agreement was entered into on 23.4.1984. The contract was to be performed within a period of eight months. A joint tentative layout plan for both the lands was granted on 26.4.1984. Nothing has been placed on record to show as to when the disputes and differences between the vendees inter se began or when the disputes and differences between the developers of two plots started. It may be true that in terms of the agreement draft layout was to be obtained in respect of Plot No. 36 but the very fact that the parties proceeded on the basis that all the lands would be developed together and steps having been taken in this behalf; it was too late for G. Srinivas Reddy to raise a fresh demand. The ld trial judge applied the principle of novation of contract having regard to the subsequent conduct of the parties. The said principle in our opinion is applicable as against the said G. Srinivas Reddy. The agreement in question is not an agreement for sale simplicitor. The parties thereto were aware that only for the purpose of development of the said plot the agreement had been entered into. If that be so the vendors were right in enforcing the terms of the said agreement/contract keeping in view the aforementioned purpose in mind. The joint promisee might not have rescinded the contract prior to the filing of the suit for damages against the defendants 1 to 3 but then when he filed the suit claiming refund of the amount of advance which he had paid by way of his share as also the damages the contract stood rescinded so far as he was concerned. His claim might have been based on the purported breach of the terms of the contract on part of defendants No. 1 to 3 but they had arrived at a compromise. True it is that G. Srinivas Reddy filed a written statement in the suit filed by the Mohammed Kasim Ali. He expressed his intention to pay the amount of consideration for the entire land but evidently the suit did not go to trial. He did not insist therefor. When an application for settlement arrived at between Mohammed Kasim Ali and the defendant Nos.1 to 3 was filed he did not object thereto. As he had appeared even before the High Court through counsel it was obligatory on his part to oppose the said compromise between the vendors and his co-vendee. It may however immediately be noticed that the court therein proceeded on the basis that the original contract was required to be enforced just as it was made even though one of their co-vendees refused to join them then and only on that basis the said principle was evolved. Keeping in view the consent decree passed by a competent court of law in terms of consent entered into by and between Mohd. Kasim Ali and defendants 1 and 3 the agreement of sale in the same form could not have been enforced. The matter might have been different had the compromise not been recorded. A part of the contract stood rescinded; it has been worked out. We however must place on record that the terms of the compromise are not placed before us. We are not concerned with the maintainability thereof. We would assume that the said suit was maintainable. But the fact that he did not choose to file a suit for specific performance of contract at the first instance speaks volumes about his conduct. The civil courts in the matter of enforcement of an agreement to sell exercise a discretionary jurisdiction. Discretionary jurisdiction albeit must be exercised judiciously and not arbitrarily or capriciously. A plaintiff is expected to approach the court with clean hands. His conduct plays an important role in the matter of exercise of discretionary jurisdiction by a court of law. In Sanjana M. Wig (Ms.) v. Hindustan Petroleum Corpn. Ltd. 2005 (9) TMI 589 - SUPREME COURT in regard to exercise of the discretionary jurisdiction this Court held that the same depends upon the facts and circumstances of each case wherefor no hard and fast rule can be laid down. We may notice that B.P. Jeevan Reddy J. in K.S. Vidyanadam ors. v. Vairavan 1997 (2) TMI 573 - SUPREME COURT held that a new look is required to be given and the rigour of the rule is required to be relaxed by courts as regards the principle that time is not of the essence of the contract in case of immovable properties as when the said principle was evolved the prices and values were stable and inflation was unknown. We think it is not a case where we should exercise our discretionary jurisdiction under Article 136 of the Constitution of India. We refuse to interfere with the discretionary jurisdiction exercised by the High Court particularly when the ld trial court had not adverted to this aspect of the matter at all. The appeals are dismissed with costs.

Summary

Issues Involved:
1. Specific performance of contract.
2. Readiness and willingness to perform the contract.
3. Joint promisees and enforceability of the contract.
4. Time as essence of the contract.
5. Discretionary jurisdiction of the court.

Detailed Analysis:

1. Specific Performance of Contract:
The plaintiffs, heirs of the original vendees, sought specific performance of a contract for the sale of land. The agreement stipulated that the sale would take effect within six months from the release of a tentative layout by HUDA. The trial court ruled in favor of the plaintiffs, holding that the defendants were bound to obtain a separate layout for the land. However, the High Court reversed this decision, stating that the agreement was not kept alive due to the compromise between one of the joint purchasers and the landowners, and thus, the contract could not be enforced solely by the plaintiff.

2. Readiness and Willingness to Perform the Contract:
The trial court found that the plaintiffs were ready and willing to perform their part of the contract, noting that they could purchase the land even without a layout. The High Court, however, disagreed, emphasizing that the plaintiffs filed the suit just before the expiry of the limitation period, indicating a lack of readiness and willingness. The Supreme Court upheld the High Court's view, noting the plaintiffs' delay in filing the suit and their failure to act promptly.

3. Joint Promisees and Enforceability of the Contract:
The plaintiffs argued that a suit for specific performance could be maintained by one of the joint promisees, even if the other refused to join. The Supreme Court acknowledged this principle but noted that in this case, the joint promisee had entered into a compromise with the defendants, effectively rescinding the contract. The Court emphasized that the plaintiffs should have opposed the compromise or filed a suit for specific performance immediately thereafter, which they failed to do.

4. Time as Essence of the Contract:
The High Court held that time was of the essence of the contract, and the plaintiffs' delay in filing the suit indicated their lack of readiness and willingness. The Supreme Court agreed, highlighting the importance of adhering to stipulated timelines in contracts, especially in the context of rising property prices and inflation. The Court noted that while some delay might be permissible, the plaintiffs' inaction for a significant period was unjustifiable.

5. Discretionary Jurisdiction of the Court:
The Supreme Court emphasized that the grant of specific performance is a discretionary relief, which must be exercised judiciously. The plaintiffs' conduct, including their delay and failure to act promptly, played a crucial role in the Court's decision to deny specific performance. The Court reiterated that a plaintiff must approach the court with clean hands and that their conduct significantly influences the exercise of discretionary jurisdiction.

Conclusion:
The Supreme Court upheld the High Court's decision, refusing to grant specific performance of the contract. The Court emphasized the importance of readiness and willingness to perform contractual obligations, adherence to stipulated timelines, and the discretionary nature of specific performance relief. The appeals were dismissed with costs, reinforcing the principles of fairness and prompt action in contractual disputes.