9911796707
TMI Blog2024 (11) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... , has proved his readiness and willingness to perform the contract. Further, this aspect must be analysed in the backdrop of the explanation to Section 16(c) of the Specific Relief Act which states that if the contract involves the payment of money, it is not necessary that the plaintiff actually tenders the money. It cannot be concluded that the petitioner was not ready or willing to perform his part of the contract merely because the balance sale consideration was due to be paid. Section 10, before the amendment in 2018 stated that the Court can exercise its discretion to award specific performance of contract where (a) there exists no standard for ascertaining the actual damage caused by the nonperformance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. The Explanation provided that unless there is anything to the contrary, the court shall presume that the compensation in money is not an adequate relief for the breach of a contract to transfer immovable property. There is nothing in the agreements to sell to rebut this statutory presumption. On an application of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Pardiwala] And Justice [Manoj Misra] JUDGMENT Dr Dhananjaya Y Chandrachud, CJI Table of Contents A. Background ..................................................................................................... 3 B. Judgments of the Trial Court, High Court and this Court ................................ 7 C. Submissions .................................................................................................. 16 D. Grounds for exercising review jurisdiction .................................................... 17 E. Limitation ....................................................................................................... 19 F. Specific performance .................................................................................... 25 G. Lis pendens ............................................................................................... 32 H. Relief ......................................................................................................... 36 1. The petitioner has instituted proceedings under Article 137 of the Constitution read with Order XLVII Rule 1 of the Supreme Court Rules 2013 seeking a review of the judgment of a three-Judge Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to the parties of the second part herein and if the purchaser does not honour to pay the balance sale consideration of Rs. 27,07,500/- (Rupees Twenty Seven Lakhs Seven Thousand and Five Hundred Only) within a period of three months from the date of this date, the advance amount paid will be forfeited and this agreement of sale will be cancelled if the vendors fail to furnish the non-encumbrance certificate, income tax exemption certificate, agricultural certificates to the purchaser within three months. [ ] 6. The parties of the first part and the parties of the second part herein undertake that they will execute a registered sale deed or deeds or any other nature of documents as desired by the purchaser in favour of the purchaser or its nominee or nominees, after receiving the balance sale consideration. [ ] 20. The parties of the first part and the second part herein undertake to execute the documents either registered or un-registered as desired by the purchaser after receiving the balance sale consideration to the extent to the schedule property. [ ] 21. The parties of the first part are not at all concerned to the sale consideration agreed by the parties of the second part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 March 2000 by registered post. 7. On 9 August 2002, the petitioner instituted a suit seeking a decree for specific performance of the first and the second agreements to sell. The case of the petitioner in the suit was: a. Rs.34,70,000 towards the sale consideration for the first agreement and Rs 10,850 as advance for the second agreement was paid. Thus, of the aggregate sale consideration of Rs. 40,20,000, Rs, 34,80,850 was paid and only a balance of Rs 5,39,150 remained outstanding; b. The possession of the suit land was delivered under the agreement; and c. The petitioner has always been ready and willing to perform his part of the agreements. Both the agreements required the respondents to furnish the petitioner with necessary permissions and certificates, which they failed to do. 8. The petitioner prayed for a decree for specific performance upon the receipt of the balance sale consideration of Rs 5,39,150. The petitioner sought alternative reliefs of (a) delivery of possession of the suit land; or (b) a direction to refund the consideration of Rs. 34,80,850 paid with interest of 36% per annum. B. Judgments of the Trial Court, High Court and this Court 9. By a judgment date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,00 by cash and Rs. 6,00,00 by cheque) 26.3.1997 Rs, 13,00,000 by cheque 9.4.1997 Rs. 5,00,000 by cheque d. Clause 3 of the sale agreements states that the petitioner is required to pay the balance consideration and the respondents must furnish certificates within three months. The clause prescribes a consequence for non-payment, that the agreement would be cancelled. However, the clause does not prescribe any consequence if the respondents fail to furnish the necessary certificates within three months. It cannot be concluded that time is of the essence only because the agreement requires the petitioner to pay the balance consideration within three months. The respondents had not obtained the permissions and certifications required under Clause 3 and they did not inform the petitioner about any steps taken to obtain them. The cross-examination of DW-1 (first respondent) indicates this. Thus, time is not of essence in the agreement; e. The petitioner claims that he issued the first legal notice on 8 February 2000. However, the postal cover and postal certificate indicate that it was registered on 31 March 2000. Thus, the petitioner ante-dated the legal notice to overcome limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The suit was filed on 30 July 2002. The suit was numbered on 9 August 2002; b. It cannot be concluded that possession was not delivered merely because there was no mention of it in the sale agreements or the first legal notice. The finding of the Trial Court on the aspect of possession and that the petitioner made a false plea in this regard is erroneous. Even otherwise, the issue of whether the petitioner has possession of the suit property is immaterial for the relief of specific performance. The delivery of possession is inherent and ancillary to the relief of specific performance under Section 55 of the Transfer of Property Act 1882. (Relied on Babulal v. Hajarilal Kishorilal 1982 (1) SCC 525 ); c. The respondents received a substantial amount of the sale consideration of Rs. 38,80,850 out of the total sale consideration of Rs. 40,20,000. The respondents failed to provide the certificates. The first respondent admitted that she received the amount in her cross-examination though she had denied the same earlier in her written statement and chief examination. The sale deed could not be executed because of the fault of the respondents. It cannot be concluded that the petitioner d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid 90 percent of the sale consideration, the suit for specific performance can be decreed in favour of the petitioner to the extent proportionate to the consideration paid. The High Court further directed that the amount of Rs, 5,39,150 deposited by the petitioner pursuant to the Interlocutory Application must be refunded along with any interest that is accrued. 11. Proceedings under Article 136 were instituted against the judgment of the High Court. By a judgment dated 25 August 2022, a three-Judge Bench consisting of Chief Justice NV Ramana, Justice Krishna Murari and Justice Hima Kohli allowed the appeal. This Court referred to the judgment in Chand Rani v. Kamal Rani (1993) 1 SCC 519 , in which it was held that there is no presumption that time is of essence in a contract for a sale of immovable property and the Court may infer if it was of essence based on (a) the express terms of the contract; (b) the nature of the property; and (c) surrounding circumstances such as the object of the contract. Relying on the judgment, this Court held that in the facts of the present case, time is of essence for the following reasons: a. Both the vendors and the purchaser s obligations in Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Court s reasoning on the question of whether the petitioner has possession of the suit property is correct; and e. Section 12 of the Specific Relief Act does not apply to situations where the inability to perform the contract arises out of the party s own conduct. Jaswinder Kaur v. Gurmeet Singh, (2017) 12 SCC 810 In the instant case, there was no inability on the part of the parties to perform the contract. The petitioner was not willing to perform the contract after entering into a time-sensitive agreement . 14. This Court directed the respondents/vendors to repay the sale consideration received with an interest of 7.5 percent from the date on which the payment was made till the time the entire amount is paid back. The payment was directed to be made within six months. 15. The petitioner filed a review petition against the judgment of this Court. C. Submissions 16. Mr Neeraj Kishan Kaul, senior counsel submitted that the judgment of this Court suffers from the following apparent errors that warrants the exercise of the review jurisdiction: a. Clause 21 of the agreements to sell refers to the sale agreement executed by the original owners in favour of the vendors in 1994. Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror which must strike one on a mere perusal and must not on a long drawn process; c. The power of review must not be exercised on the ground that the decision was erroneous on merits; d. The phrase any other sufficient reason means a reason that is analogous to the grounds specified in Order 47 Rule 1 CPC; and e. The mere possibility of two views on the subject cannot be a ground for review. 20. Let us proceed to analyse if the judgment of this Court satisfies the grounds for review. The issues which arose for the consideration of this Court were twofold: first, whether the suit instituted by the petitioner was barred by limitation; and second, whether the suit for specific performance must be decreed. The finding that time was of essence to the contract was central to the Court s reasoning on both the issues. E. Limitation 21. The Schedule to the Limitation Act 1963 prescribes the period of limitation. Article 54 of the Schedule prescribes the period of limitation for a suit for specific performance of a contract : Description of suit Period of limitation Time from which period begins to run 54. For specific performance of a contract Three years The date fixed for the performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a consequence for not producing the documents within three months, which is the cancellation of the sale agreements. This Court seems to have missed the phrase and this agreement of sale will be cancelled.. . If this Court had read and this agreement of sale will be cancelled as a consequence of the non-fulfilment of the obligation cast on the purchaser, it could still be argued that it was a probable (though in our opinion, erroneous) view and not an error apparent on the face of the record. However, the judgment completely disregards the phrase and this agreement of sale will be cancelled in Clause 3. In paragraph 32 of the judgement, this Court further notes that non-payment of the balance consideration would lead to a severe consequence of forfeiture : 33. Coming to the aforesaid indicators, the language of the agreements makes it clear that severe consequences of forfeiture would ensue if the payment is not made within three months of the date of the agreements. 25. Clause 3 has two parts. The first part casts an obligation on the purchaser/petitioner and prescribes consequences for it, that is, the forfeiture of the advance paid. The word and disjuncts this part from the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition to the vendors because though the vendors were put in possession of the suit property after the sale agreement, a sale deed was not executed. Instead, an irrevocable power of attorney was executed in favour of the vendors. Though only the first and the second respondents offered to alienate the suit property to the petitioner, the agreement is executed by the original owners and vendors other than the first and the second respondent as well to prevent any litigation in the future. The relevant clauses of the recital to the agreement dated 26 March 1997 are extracted below: 4. Whereas parties of the Second part herein have entered into an agreement of sale with the parties of the first part herein dated 19 March 1994. 5. Whereas the parties of the second part herein have purchased from the parties of the first part to an extent of Articles 127-129 guntas only in lad bearing Sy.No. 301 part 302, 303, 304, 305, 306, 307, 308 and 309 for a valuable consideration and on the date of the agreement possession was delivered to an extent of Articles 65-23 guntas and it was specifically agreed that an irrevocable general power of attorney will be executed through a registered document i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), this Court held there is no presumption that time is of essence in a contract for a sale of immovable property and the Court may infer if it was of essence based on (a) express terms of the contract; (b) nature of the property; and (c) surrounding circumstances such as the object of the contract. Clause 21 was interpreted to cast light upon the surrounding circumstances/the object of the contract and was crucial to its decision. 29. Having concluded that the interpretation of Clauses 3 and 21 of the Sale Agreements was erroneous, there is nothing in Clause 23 alone that could be interpreted to prescribe a time for the performance of the contract. Further, the judgment also does not take note of Clause 6 of the agreements to sell which provides that a sale deed will be executed after receiving the balance sale consideration. This clause does not prescribe any time period within which the sale deed must be executed. Another question is whether Clause 3 can be independently interpreted to prescribe a date for the performance of contract. The consequence of the non-payment of the balance consideration in terms of Clause 3 is the forfeiture of the advance amount paid by the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced- (a) when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. Explanation.- Unless and until the contrary is proved, the court shall presume (i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and (ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases: (a) where the property is not an ordinary article of commerce, or is of special value of interest to the plaintiff, or consists of goods which are not easily obtainable in the market; (b) where the property is held by the defendant as the agent or trustee of the plaintiff. 33. This Court referred to the judgment in Saradamani Kandappan v. Rajalakshmi (2011) 12 SCC 18 , which laid down the factors that the Courts must consider while deciding whether to exercise the discretion of decreeing speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender to the defendant or to deposit in court any money except when so directed by the court; 35. This Court concluded that the petitioner was not ready and willing to perform his part (as required by Section 16(c)) because the balance sale consideration was not paid within three months as required by Clause 3 : 58. From the aforesaid, it is clear that the purchaser ought to have been vigilant in the case at hand to enforce his right and could not have been lackadaisical in his approach. From the facts, it is clear that the purchaser had entered into an agreement way back on 26/27/.03.1997, which had a clause mandating completion of the contract by payment of the remaining consideration within three months. The aforesaid clause was drafted, as alluded to earlier, for providing one last opportunity for the purchaser to make good their lapse which had happened on the earlier occasion. In this context, the time for performance of the contract including the payment lasted till the month of June 1997. ( emphasis supplied ) 36. It is clear from the above extract that this Court held that the petitioner was not ready and willing to perform the contract in which time was of essence. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes and documents for completing the sale transaction. But the defendants 6 8 pleaded that they have obtained necessary documents both in the written statements and also in the evidence. In the cross-examination that version of D.W.1 is dismantled and trial Court also comes to the conclusion that the defendants without obtaining documents and certificates simply pleaded that they are ready with the certificates. However, that finding is not attacked in this appeal, which goes to show that the defendants are at fault in not obtaining certificates for fulfilling their part of the contract, though, the plaintiff paid 90% of the sale consideration requesting the defendants 6 8 to receive balance sale consideration. ( emphasis supplied ) 40. The judgment of this Court in paragraph 67 only refers to the deposition of DW-1 without referring to her cross-examination or the fact that the respondents did not challenge the finding of the Trial Court on this aspect. This is another error apparent on the face of the record. 41. Having held that the basis of the reasoning of this Court on whether the petitioner was willing to perform the contract has an error apparent on the face of the record, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. 44. On 23 September 2022, the petitioner filed a review petition against the judgment of this Court dated 25 August 2022. The review was filed within thirty days, the prescribed period of limitation in terms of Order XLVII Rule 2 of the Supreme Court Rules 2013. On 14 October 2022, the Registry sent a letter to the petitioner asking him to cure defects. On 11 November 2022, the petitioner cured the defects. On 13 December 2022, the review petition was registered. On 27 January 2023, the counsel for the petitioner sought six weeks to bring some documents on record. On 1 March 2023, the matter was listed before a three-Judge Bench of Justice Krishna Murari, Justice Hima Kohli and one of us (Justice DY Chandrachud). The matter was not taken up. By an order dated 31 August 2023, Justice D Y Chandrachud allowed the application for listing the review petition in open court and issued notice, returnable in six weeks. Justice Hima Kohli did not agree and was of the view that the review petition be dismissed. Justice Narasimha who was the third member of the Bench recused from the matter for personal reasons. Subsequently, Justice Manoj Misra was nominated as the third member of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the claim that is put forward if fictitious. See Nagubai Ammal v. B Shama Rao, 1956 SCC 321 ; d. The right to immovable property must be directly and specifically in question in the suit or proceeding; e. The property must be transferred by a party to the litigation; and f. The alienation must affect the rights of any other party to the dispute. See Amit Kumar Shaw v. Farida Khatoon, (2005) 11 SCC 403 47. In short, the doctrine of lis pendens that Section 52 of the Transfer of Property Act encapsulates, bars the transfer of a suit property during the pendency of litigation. The only exception to the principle is when it is transferred under the authority of the court and on terms imposed by it. Where one of the parties to the suit transfers the suit property (or a part of it) to a third-party, the latter is bound by the result of the proceedings even if he did not have notice of the suit or proceeding. The principle on which this doctrine rests was explained by Lord Turner in Bellamy v. Sabine (1857) 1 De G J 566 as follows : It is, as I think, a doctrine common to the courts both of Law and Equity and rests, as I apprehend, upon this foundation that it would plainly be impossib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is issued by this Court. Thus, Section 52 of the Transfer of Property Act would apply to the third-party purchaser once the sale was executed after the review petition was instituted before this Court. Any transfer that is made during the pendency is subject to the final result of the litigation. See GT Girish v. Y Subba Raju, 2022 8 SCR 991 . H. Relief 50. The High Court relied on Section 12 of the Specific Relief Act to decree specific performance only to the extent of the consideration paid by the petitioner. The directions of the High Court are extracted below: 89. [ ], this court is of the considered opinion that by exercising power under Section 12, in order to meet the ends of justice, suit can be decreed for specific performance only to the extent of 90% of the amount paid by the plaintiff to the defendants 6 8 towards sale consideration. 90. In the result, Appeal Suit is allowed in part directing the defendants 6 8 to register the suit schedule property in favour of the plaintiff proportionate to the extent of amount paid by the plaintiff i.e., 90% of the total sale consideration[ ]. 91. It is needless to state that the Suit Schedule Land is required to be divided by me ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
