1968 (2) TMI 130 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the time for payment of Rs. 8,000 on or before 22nd August, 1958 is the essence of the contract.
2. Whether the contract has been avoided by the 1st defendant.
3. Whether the receipt of Rs. 10,000 by the 2nd defendant was binding on the 1st defendant and amounted to a waiver of the 1st defendant's right to rescind the contract.
4. Whether the plaintiff was otherwise ready and willing to perform the contract.
5. Whether the plaintiff is disentitled to claim specific performance either on the ground of default in payment of Rs. 8,000 or his not being ready and willing to perform the contract.
6. Whether the plaintiff became disentitled to specific performance by reason of the clause relating to security in Exhibit A-1 and Exhibit B-3 being vague and indefinite, and therefore void.

Analysis:

Issue 1: Whether the time for payment of Rs. 8,000 on or before 22nd August, 1958 is the essence of the contract.
The court examined Section 55 of the Contract Act, which states that a contract becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract. The court found that the contract (Exhibit A-1) did not expressly make time the essence of the contract. The absence of a forfeiture clause for the advance payment and the provision for interest on the balance indicated that time was not intended to be of the essence. The court held that the mere failure to perform a term of the contract before the specified time does not make the contract voidable unless it was the intention of the parties.

Issue 2: Whether the contract has been avoided by the 1st defendant.
The court found no evidence that the 1st defendant or her representatives rescinded the contract or communicated such rescission to the plaintiff. The court noted that even after the stipulated time for payment had passed, the 1st defendant did not take any steps to cancel the contract or take back possession of the land. The court concluded that the contract was not avoided by the 1st defendant.

Issue 3: Whether the receipt of Rs. 10,000 by the 2nd defendant was binding on the 1st defendant and amounted to a waiver of the 1st defendant's right to rescind the contract.
The court found that the 2nd defendant received Rs. 10,000 with the knowledge and acquiescence of D.W. 2 (the father-in-law of the 1st defendant), who had the authority to represent the 1st defendant. The receipt (Exhibit A-2) did not indicate that the payment was conditional. The court held that the receipt of Rs. 10,000 amounted to a waiver of the 1st defendant's right to rescind the contract.

Issue 4: Whether the plaintiff was otherwise ready and willing to perform the contract.
The court examined the plaintiff's financial capacity and found that he had the means to perform his part of the contract. The plaintiff had deposited Rs. 21,500 in the Andhra Bank, Tenali, and had purchased stamp papers for the execution of the sale deed. The court held that the plaintiff was ready and willing to perform his part of the contract.

Issue 5: Whether the plaintiff is disentitled to claim specific performance either on the ground of default in payment of Rs. 8,000 or his not being ready and willing to perform the contract.
The court held that the plaintiff was not disentitled to claim specific performance. The contract was not avoided, and the plaintiff had demonstrated his readiness and willingness to perform his part of the contract.

Issue 6: Whether the plaintiff became disentitled to specific performance by reason of the clause relating to security in Exhibit A-1 and Exhibit B-3 being vague and indefinite, and therefore void.
The court noted that the plaintiff's counsel stated that the plaintiff did not press for a decree for specific performance in respect of the security clause but was content with a decree only against the 1st defendant. The court held that the contract relating to the execution of the sale deed by the 1st defendant could be specifically enforced, as it stood on a separate and independent footing from the covenant of the 2nd defendant to furnish security.

Conclusion:
The court allowed the appeal, set aside the decree of the trial court, and decreed the suit for specific performance against the 1st defendant. The plaintiff was directed to deposit the balance of the sale price with interest into the court within two months. The 1st defendant was directed to execute the sale deed within one month of receiving notice of the deposit. The suit against the 2nd defendant was dismissed. The plaintiff was awarded costs from the 1st defendant, while the 2nd defendant was directed to bear his own costs.