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TMI Blog2002 (8) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment. 1.2. The plaintiff had succeeded in obtaining the decree of specific performance of the contract for sale of 1/7th share of the defendant No. 1 in the suit property. The said 1/7th share, however, was purchased by M/s. Ceean International Private Limited, appellant, in F.A. No. 13 of 2000 during the pendency of the suit. Submission on behalf of the appellant in F.A. 13 of 2000: 2. Mr. Sudhis Dasgupta appearing with Mr. Bagchi and Mr. Sanjoy Jain, relying upon the various facts and materials on record contended that it was the liability of the plaintiff to redeem the share of the defendant No. 1 from the mortgage with LIC and also to purchase the property subject to the encumbrances referred to in the agreement. From the records, it was clear that the plaintiff was not ready and willing throughout to perform the essential part of the contract, which was to be performed by him. 2.1. Referring to the amount due on account of the mortgage, he had pointed out that in order to avoid accrual of further interest, the defendant No. 1 intended to sell the property at the earliest. In that view of the matter, time was made essence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erformance. In support he had relied on K.S. Vidyanandam and Ors. v. Vairavan, AIR1997SC1751 . Submission on behalf of the appellant in F.A. 14 of 20QO: 3. Mr. S.P. Roychowdhury, learned counsel appearing on behalf of the defendant No. 1, being the appellant in F.A. No. 14 of 2000 had supported Mr. Dasgupta. He had led us through various clauses of the agreement and had pointed out to the absence of readiness and willingness on the part of the plaintiff. He had reiterated the contention of Mr. Dasgupta to the extent that the plaintiff had been insisting upon performance at variance of the contract. He had also relied on the same decisions on which Mr. Dasgupta had relied. 3.1. In his deposition, the plaintiff himself had admitted that time was essence of the contract. But the plaintiff did not take any step despite being asked for by the defendant No. 1 through his letter. Unless a draft conveyance's handed over, the clearance under Section 230A of the Income Tax Act could not be obtained and that the plaintiff had refused to deliver the draft conveyance. He pointed out that in terms of Section 55 of the Contract Act, if a particular time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract for sale of immovable property, time cannot be the essence of the contract. In the present case, from the surrounding circumstances and the conduct of the parties, it appears that the time was never made essence of the contract. Inasmuch as, at one place three months was stipulated and in another place six months was stipulated. In any event, the essence of time is dependent on the redemption of the mortgage. If it takes a longer time, the principle of essence of time cannot be adhered to and implemented. 4.2. He had distinguished all the decisions cited by Mr. Dasgupta and Mr. Roychowdhury respectively. He pointed out that the defendant No. 2 is not entitled to agitate this point of readiness and willingness of the plaintiff since it had never contested the suit on those grounds. It had also not cross-examined the witnesses of the plaintiff. Therefore, it is precluded from assailing the same on those grounds. He further points out that when the suit was decided, the decision in Jugraj Singh and Anr. v. Labh Singh and Ors., (1995)2SCC31 was governing the field. This decision precluded a purchaser from challenging the readiness and willingness of the plaintiff. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Order 41 Rule 27 CPC. According to him, the grounds spelt out in the application for additional evidence is wholly misplaced and misconceived. He further contends that none of those documents are relevant for the purpose of this appeal. None of these documents could have any bearing either with regard to the readiness and willingness of the plaintiff or with regard to the question that time was essence of the contract or otherwise. Therefore, the application for additional evidence should be dismissed with costs. Facts: 7. Before we address ourselves on the respective questions raised by the learned counsel for the respective parties, we may refer to the relevant facts in order to appreciate the question involved herein. From the materials on record including those sought to be adduced as additional evidence, the facts may be summarised as hereafter. 7.1. The property originally belonged to one Satya Prasanna Basu, father of the defendant No. 1. The said Satya Prasanna Basu mortgaged the property with Hindustan Insurance Company on 31st May 1948. On 29th of October, 1960, Satya Prasanna died intestate leaving behind several heirs includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the sale filed by LIC, this Court had directed the defendant No. 1 to liquidate the entire dues of LIC including interest within one month. On 7th March 1995, a banker's cheque ₹ 5,40,366.84 in the name of LIC was issued at the instance of the defendant No. 2. This was forwarded to LIC by the defendant No. 1 in terms of the order of the Court on 10th of March 1995. The LIC accepted the cheque against the mortgage decree in terms of the order of this Court on 14th of March 1995 on which date LIC granted receipt to the defendant No. 1. 7.5. On this 14th of March 1995, the plaintiff filed Title Suit No. 90 of 1995 before the learned Munsif, 3rd Court, Alipore against the defendant No. 1 for a declaration and permanent injunction restraining him from transferring the property. This suit, however, was dismissed for default in 1997. On 28th April 1995, the present suit was filed. On 19th of June 1995, the defendant No. 1 sold his right, title and interest in the property to the defendant No. 2, appellant. The defendant No. 2 had purchased 3/7th share by negotiation and 2/7th share by virtue of decrees passed in Title Suit No. 146 of 1995 and Title Suit No. 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of due diligence is unable to produce such evidence at the time of passing the decree or where the Appellate Court requires the document to be produced in order to enable it to pronounce judgment or for any other substantial cause. In the present case as discussed above, the defendant No. 2 could not produce evidence in view of the judgment in Jugraj Singh (supra). Now that the law has since changed, the case of the defendant No. 2 may come within the purview of Clause (aa) of Rule 27 Sub-rule (1) of Order 41 CPC. 8.3. At the same time, Section 20 SR Act makes the Court's power to grant specific performance discretionary guided by certain judicial principles as provided in Sub-section (2) thereof. In order to exercise such decision, if it appears to the Court that production of certain documents are required for the purpose of pronouncing judgment, the Appellate Court may resort to Clause (b) of Order 41 Rule 27(1) CPC. Under Section 20(2) SR Act, Court has to consider whether such grant would allow an unfair advantages to the plaintiff over the defendant or whether such grant could involve some hardship on the defendant, which the defendant did not fores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , majority of these documents are related to the certified copies of the orders passed by different Courts and challans issued by Courts. Copy of the application for additional evidence was served upon the Advocate-on-Record for the respondent long ago. No opposition to the same, however, has since been filed. Even at the time of hearing, genuineness or veracity of any of these documents, copies whereof have been annexed, has since assailed by Mr. Bachawat. The other documents, which are not Court records, do find support from the Court records. Inasmuch as, the Court permitted deposit of the dues of LIC within a particular date and it was so deposited through Banker's cheque. Upon receipt thereof, LIC had issued its receipt. A further order was obtained for deposit of a sum of ₹ 1,50,000/- as Interest or compensation payable to the auction purchaser. The auction purchaser was allowed to withdraw the above amount as well as the amount deposited by him. Pursuant to such order, the sum of ₹ 1,50,000/- was deposited within the time stipulated. Thus, having regard to the facts and circumstances of this case, the ratio decided in Ashalata (supra) cannot be attracted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is to be examined. In Jugraj Singh (supra), by two Judges Bench, it was held that the plaintiff was not ready and willing to perform his part of the contract is specially available to the vendor/defendant. It is personal to him. The subsequent purchasers have got only the right to defend their purchase on the premise that they have no prior knowledge of the agreement for sale with the plaintiff. They are bona fide purchaser for valuable consideration. Though, they are necessary parties to the suit, since any decree obtained by the plaintiff would be binding on the subsequent purchasers, the plea that the plaintiff must always be ready and willing to perform his part of the contract is available only to the vendor or his legal representatives, but not to the subsequent purchasers. Admittedly, this, was the law that governed the filed till the decree in the instant suit was passed, namely, on 31st August 1999. Therefore, the defendant No. 2 was not entitled to contest the suit on any of these questions. But defendant No. 2 was a necessary party to the suit as subsequent purchaser and was so made a party to the suit and the decree is binding on it. It has preferred the appeal, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion we had occasion to deal with this question relying on the decision in Lakshmi Narayan Guin v. Niranjan Modak, [1985]2SCR202 . The said decision had followed the decision on this principle in Ram Sarup v. Munshi, [1963]3SCR858 , followed in Mula v. Godhu, [1970]2SCR129 and Dayawatt (supra), while quoting from [1966]3SCR275 . In Lakshmi Narayan (supra), the Apex Court had relied upon Amarjit Kaur v. Pritam Singh, [1975]1SCR605 ; Kristnama Charter v. Mangammal, (1902) ILR 26 Mad 91 (FB) as well as Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri. 9.3. Mr. Bachawat, on the other hand, sought to contend that the changed law has no retrospective application. As such the appellant cannot take advantage of the decision in Ram Awadh (supra). He relied on L.C. Golak Nath and Ors. v. State of Punjab and Ors., [1967]2SCR762 . But that principle has no manner of application in a case where the order has not reached finality. Appeal is a continuation of proceedings, the judgment and decree is subject to appeal and has not reached finality. Therefore, no right appears to have been vested in the plaintiff in order to attract the mischief of affecting vested right. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of Mr. Bachawat. Mr. Bachawat had relied upon the decision in A.E.G. Carapiet v. A.Y. Derderian, AIR1961Cal359 to contend that when a party has declined to avail himself of the opportunity to put his essential and material case in cross-examination, it must follow that he believed that the testimony given would not be disputed at all. It is wrong to think that this is merely a technical rule of evidence. It is a rule of essential justice. It serves to prevent surprise at trial and miscarriage of justice, because it gives notice to the other side of the actual case that is going to be made when the turn of the party on whose behalf the cross-examination is being made, comes to give and lead evidence by producing witnesses. But this decision does no help us in the present case where the defendant No. 2 could not cross-examine because of the law prevailing at that point of time. Mr. Bachawat had also sought to contend that the defendant No. 2 could have cross-examined the witnesses, but Mr. Dasgupta relied on K. Venkataramiah v. A. Seetharama Reddy and Ors., [1964]2SCR35 in order to contend that no such cross-examination would be permissible since it would touch his defence w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion intended to be established by the contract and that he has averred and proved that he has performed and was always ready and willing to perform the essential terms of the contract to be performed by him unless prevented or waived by the defendant. The ingredients may be specified thus: (1) the plaintiff has become incapable of performing any part of the contract that remains to be performed by him; or (2) he has violated any essential term of the contract that remains to be performed by him; or (3) he acts in fraud of the contract; or (4} he willfully acts at variance with the relation intended to be established by the contract; or (5) he willfully acts In subversion of the relation intended to be established by the contract; or (6) he fails to aver that he has performed the essential terms of the contract to be performed by him; or (7) he was always ready and willing to perform the essential terms of the contract to be performed by him; or (8) he was prevented by the defendant from performing any part of the contract; or (9) the defendant had waived performance of any part of the contract; and (10) he has to prove the conditions contained in (6) to (8). According to the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit and decree and the pendency of the appeal of LIC. Therefore, the plaintiff must show that he was ready to perform this essential part of the contract. 13.2. The other essential part of the contract was the time limit provided therein. The transfer was to be completed within three months from the date of the agreement. In default of completing the transaction within six months from the date of execution of the agreement would render the agreement invalid and earnest money forfeited. This was so intended as it can be discovered from the terms of the contract that the defendant No. 1 was eager to get the property sold at the earliest or else there was every likelihood of the auction sale being confirmed. Therefore, the performance within the time stipulated was also an essential part of the terms of the contract. 13.3. The other essential term was that the property is to be redeemed from LIC by the plaintiff/purchaser while restricting his liability towards payment for redemption of the property to LIC at ₹ 70,000/-. If we read the agreement as a whole, it will be clear and unambiguous that this redemption was a part to be performed by the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.84. This gives an idea that how the interest was mounting. From the materials on record and the terms of the agreement providing stipulation of time making the same essence of contract, it is clearly apparent that the vendor was eager to sell the property at the earliest within a reasonable time or else the interest would go on mounting and the auction sale was likely to be confirmed. Therefore, these were the factors, which has driven the vendor to enter into the contract in order to get rid of the liability of the mortgage with LIC and also to avoid the confirmation of auction sale, which they had unsuccessfully attempted to set aside. 13.7. The defendant No. 1 through his letter dated 6th May, 1994, being Exhibit 'B', requested the plaintiff to forward the draft conveyance in order to enable him to obtain clearance from the Income Tax Department under Section 230A(1) of the Income Tax Act. In reply, the plaintiff in his letter dated 31st May, 1994 (Exhibit 3) pointed out that the defendant No. 1 should make out a good and marketable title to his satisfaction in respect of the 1/7th share of the defendant No. 1 free from all encumbrances, impendence, trust, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. Virtually, it was repeated in each clause dealing with a particular condition. 13.9. In condition No. 1, the plaintiff was to redeem the property from the mortgage of LIC, limiting its liability to the extent of ₹ 70,000/-. The plaintiff was also given liberty to negotiate with the tenants and obtain possession of the property even before the transaction is complete. There is nothing to show that the plaintiff had ever attempted to negotiate with the tenants or obtained possession as provided in condition No. 7. The time was made essence of contract and that the 3 (three) months was repeated more than once and it had further provided a 6 (six) months limit for cancellation or forfeiture of the contract. The plaintiff was not ready and willing to redeem the mortgage. But that could not have been done by him since part redemption was subject to the agreement of LIC, a third party to the contract. LIC declined part redemption of the mortgage. Therefore, non-compliance of redemption by the plaintiff would not make him disentitled to obtain specific performance of the contract. But, he cannot insist that the property should be made free from the mortgage wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the sale was always subject to those encumbrances mentioned therein. 13.12. From the above discussion, it appears that the plaintiff was not ready and willing to perform the essential terms of the contract to be performed by him. Was there any absence of readiness and willingness on the part of the defendant No. 1?: 14. Similarly, from the above discussion, it further appears that the defendant No. 1 was always ready and willing to perform his part of the contract and that the defendant had never prevented the plaintiff from performing any essential term of the contract to be performed by the plaintiff. Neither defendant No. 1 had waived any of the terms of the contract. 14.1. On the question of readiness and willingness, Mr. Dasgupta had relied on Mst. Sahida Bibi v. Sk. Golam Muhammad, AIR1983Cal216 . In the said decision, it was held that one cannot enforce specific performance when he has become incapable of performing or violates any essential term of the contract that on his part remains to be performed, or acts in fraud of contract, or willfully acts at variance with or in subversion of the relation intended to be estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elayed the execution on one pretext or the other. Therefore, it was held that the plaintiff was not ready and willing to perform his part of the contract. In the said judgment, it was further pointed out that there is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness, it may be meant the capacity of the plaintiff to perform the contract, which includes his financial position to pay the purchase price. In determining willingness to perform his part of the contract, the conduct has to be properly scrutinised. Assuming that he had funds, he has to prove his willingness to perform his part of the contract. This can be ascertained from his conduct. Relying on the facts of the said case, it was found that the plaintiff was not willing to perform his part of the contract. Referring to the conduct of the party and the attending circumstances, the Court may infer from the facts and circumstances whether the plaintiff was ready and always ready and willing to perform his part of the contract. In P.R. Deb Associates v. Sunanda Roy, [1996]3SCR163 , the Apex Court had held relying on Chand Rani v. Kamal Rani, AIR1993SC1742 , a Five J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only the agreement was to stand cancelled but also the earnest money was to stand forfeited, while the stipulation of time that was made essence of contract has provided 3 (three) months from the date of the agreement. The forfeiture clause itself is an indication of making the time essence of the contract. Having regard to the facts that by passage of time, a decree for a sum of ₹ 59,715.81 increased to ₹ 5,12,040.72 in April 1994 and then ₹ 5,40,366.84 in March 1995, it appears that the vendor was eager to complete the transaction at the earliest so as to get rid of the mounting interest being accumulated further. It further appears that the auction sale was sought to be set aside on behalf of the vendor unsuccessfully and that the confirmation of sale, on being opposed by them, was rejected and against which the appeal by LIC was pending. There was every likelihood of confirmation of the sale and thereby the vendor's attempt to sell the property, subject to the encumbrances as stated in the agreement, would be belied, if there was delay. 15.2. From these attending circumstances, it appears that time was intended to be made essence of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at the letter but at the substance of the agreement. It is to be ascertained whether the terms of the contract named a specific time for completion of the transaction. In substance whether it is intended that it is to be complete within a reasonable time. But such intention to make time the essence of contract must be expressed in unequivocal language. If expressed in writing, the language must be unmistakable. It may also be inferred from the nature of property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulation of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to a sale of immovable property, it would normally be presumed that time was not essence of contract. 15.5. In Jamshed Khadaram Irani v. Burjorji Dhunjibhai ILR 40 Bom 289, the Judicial Committee of the Privy Council observed that the principle underlying Section 55 of the Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of fine for default. The Apex Court after having analysed various cases had laid down the guideline in the following manner for determining as to whether the time was made essence of the contract, i.e., from the expressed terms of the contract, from the nature of the property, from the surrounding circumstances, namely, the object of making the contract. In P.R. Deb and Associates (supra) also the same stand was affirmed. Relying on Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Karuvila's Son 1987 SCC 340, the Apex Court had observed that before granting specific performance, the Court should meticulously consider all facts and circumstances. The Court has to take care to see that it is not used as an instrument of oppression to have an unfair advantage. 15.7. Applying the said test in the present case, as discussed, in our view, if we grant specific performance of the contract, then It would be allowing the plaintiff an unfair advantage independent of the contract, inequitable for the defendants. Section 55 Contract Act: 16. Section 55 Contract Act prescribes that if some part of the contract is to be performed within a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the property, While exercising its decision, the Court should also bear in mind that when the parties prescribe certain time-limit for taking steps by one or the other party, it must have some significance and that the said time limit cannot be ignored altogether on the ground that time has not been made the essence of the contract relating to immovable properties. In case of urban properties in India, it is well known that their prices have been going up sharply over the last few decades, particularly, after 1973. Court cannot be too oblivious to the reality. It is not possible to agree with the decision of the Madras High Court if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the Court by. law (S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar, AIR1952Mad389 ). The rigor of the rule evolved by Courts that time is not the essence oi the contract in case of immovable properties, evolved in times when prices and values were stable and inflation was unknown, therefore, such rule requires to be relaxed, if not modified, particularly, in the case of urban immovable properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff, it would be allowing unfair advantage to the plaintiff if only 1/7th share is sold to him. This will provide great hardship on the defendant No. 1, who would be bound to cough up the consideration money received by him from the defendant No. 2 and, at the same time, the plaintiff would take advantage of the effort put in by the defendant No. 2 to get the property freed from encumbrances and that the defendant No. 2 having purchased 5/7th share, the plaintiff would be allowed to purchase 1/7th share reducing his interest to 4/7th while the plaintiff had never shown his interest in respect of the other parts of the property. 17.5. Having gone through the additional evidences produced, we have every reason to hold that it would be inequitable to grant the relief to the plaintiff having regard to the balance of equity in favour of the defendant Nos. 1 and 2 and particularly, the defendant No. 2. Therefore, having regard to the principle relating to Section 20 SR Act, we are of the view that the facts and circumstances of the case are fit for exercising the discretion contemplated under Section 20 of the SR Act guided by sound judicial principles as discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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