Balasaheb
Dayandeo Naik (Dead) Through LRS & Ors Vs. Appasaheb Dattatraya Pawar
[2008] Insc 83 (24
January 2008)
Dr.
Arijit Pasayat & P. Sathasivam
(Arising
out of SLP (C) No. 16694 OF 2005) P. Sathasivam, J.
1)
Leave granted.
2)
This appeal is directed against the judgment and order dated 11.01.2005 passed
by the High Court of Judicature at Bombay in First Appeal No. 743 of 1993 in and by which the High Court set
aside the decree for specific performance granted by the trial Court and
consequently dismissed the suit of the plaintiffs.
3)
Brief facts in a nutshell are:
The
appellants/plaintiffs in special civil suit No. 320 of 1988 filed the same for
specific performance of agreement dated 31.07.1985. According to the
plaintiffs, the respondent herein/defendant is the owner of land Block No. 208
and Block No. 209 respectively admeasuring Area H. 0.60 R and H. 0.40 R of
Village Nagaon in Hatkanangale Tahsil. The defendant had entered into an
agreement for sale of the said lands to the plaintiffs for a consideration of
Rs.85,000/- per acre. The agreement was reduced into writing and according to
the terms of the agreement, the sale deed was to be executed by the defendant
within a period of six months. It was agreed that possession of the lands was
to be delivered at the time of execution of sale deed. The defendant has also
undertaken the responsibility of obtaining necessary permission for sale of the
lands, if required. On the date of execution of the agreement, an amount of
Rs.20,000/- was paid by the plaintiffs to the defendant as earnest money and
balance amount of the consideration was to be paid at the time of execution of
the sale deed. The plaintiffs were always ready and willing to perform their
part of the contract but the defendant avoided to receive the balance amount of
consideration and neglected to execute the sale deed. The plaintiffs sent a
legal notice on 16.07.1988 to the defendant through their advocate calling upon
him to perform his part of the obligation under the contract. In spite of the
notice, the defendant did not comply with the requirements which necessitated
the plaintiffs to file the suit for specific performance or in the alternative
refund of earnest money with interest thereon @ 15% per annum.
4) The
defendant filed a written statement wherein he denied the plaintiffs claim. It
was further stated that though agreement for sale of the suit lands was entered
into between him and the plaintiffs on 31.07.1985, the sale deed was to be
executed within a period of six months from the date of contract as he was in
dire need of money for construction of his house and, therefore, the time was
the essence of the contract. He had called upon the plaintiffs to pay the
balance amount of consideration and get the sale deed executed. But the
plaintiffs were not in a position to arrange the balance amount of
consideration and complete the contract. As the market price of the
agricultural lands have now gone up, the plaintiffs by purchasing the suit
lands are intending to dispose of the same to others at a higher price. In view
of the same, the plaintiffs are not entitled to discretionary relief of
specific performance of contract.
5) The
learned Civil Judge (Senior Division), on 23.02.1993, after finding that the
defendant has failed to prove that time was the essence of contract and the
plaintiffs were and are ready and willing to perform their part of contract
decreed the suit as prayed for. Aggrieved by the aforesaid judgment of the
trial Court, the defendant filed First Appeal No. 743 of 1993 before the High
Court of Judicature at Bombay. The learned Single Judge of the
High Court not in agreement with the conclusion of the trial Court and finding
that plaintiffs failed to substantiate their plea allowed the appeal of the
defendant and dismissed the suit. Questioning the judgment and order of the
High Court, the plaintiffs have filed the present appeal by way of special
leave. During the pendency of the appeal before this Court, Balasaheb Dayandeo Naik/first
plaintiff died and his legal representatives were brought on record as per
order dated 19.09.2006 in I.A. No. 3 of 2005.
6) We
heard Mr. Makarand D. Adkar, learned counsel appearing for the appellants and
Mr. V.N. Ganpule, learned senior counsel appearing for the respondent, perused
the entire annexures and other relevant materials filed before this Court.
7)
Having regard to the terms of agreement of sale dated 31.07.1985, reasonings of
the trial Court as well as the High Court and submissions before this Court,
only two points arise for consideration of this Court, namely,
(a) whether
time is the essence of the contract? and
(b) whether
the plaintiffs were ready and willing to perform the contract?
8) In
order to find an answer to the above questions, it would be useful to refer the
relevant recitals from the agreement of sale. Para 3 of the agreement specifically mentions the details of the land sought
to be sold such as extent and boundaries. It also refers the easement rights
and the period in which the sale has to be completed.
The
recital reads as under:- From the total consideration I have received
Rs.20,000/- as an earnest money of which no independent receipt is necessary.
Rest of the amount is to be paid by you at the time of sale deed of the said
lands. It is agreed between the parties that the sale deed is to be executed
within 6 months from today. Possession of the land is to be handed over at the
time of sale deed. It is also relevant to mention the default clause which
reads as under:-
For
completion of the sale deed the permission is required to be obtained by me. If
I fail to execute the said deed within stipulated period then you have to get
it executed on the basis of this agreement. On the contrary if you fail to get
execute the sale deed then this agreement is supposed to be cancelled and the
earnest amount will be forfeited. The land is free from all sorts of
encumbrances. This agreement is binding on myself and my legal heirs etc. dated
31/7/1985. The above-mentioned details
in the agreement of sale clearly show
a) that
the subject-matter of the property is an agricultural land/immoveable
properties
b) the
sale deed is to be executed within six months from the date of sale agreement
i.e. 31.07.1985.
c) possession
of the land to be handed over at the time of execution of sale deed
d) failure
to get execute the sale deed, the earnest money will be forfeited. With these
factual details, let us consider the legal principles enunciated by this Court.
(Smt.) (dead) by LRs, (1993) 1 SCC 519, a Constitution Bench of this Court has
held that in the sale of immoveable property, time is not the essence of the
contract. It is worthwhile to refer the following conclusion:
19.
It is a well-accepted principle that in the case of sale of immovable property,
time is never regarded as the essence of the contract. In fact, there is a
presumption against time being the essence of the contract. This principle is
not in any way different from that obtainable in England. Under the law of equity which governs the rights of the
parties in the case of specific performance of contract to sell real estate,
law looks not at the letter but at the substance of the agreement.
It has
to be ascertained whether under the terms of the contract the parties named a
specific time within which completion was to take place, really and in
substance it was intended that it should be completed within a reasonable time.
An intention to make time the essence of the contract must be expressed in
unequivocal language. 21. In Govind Prasad Chaturvedi v. Hari Dutt Shastri
(1977) 2 SCC 539 following the above ruling it was held at pages 543-544: (SCC para
5) ... It is settled law that the fixation of the period within which the
contract has to be performed does not make the stipulation as to time the
essence of the contract. When a contract relates to sale of immovable property
it will normally be presumed that the time is not the essence of the contract.
[Vide Gomathinayagam Pillai v. Pallaniswami Nadar 1 (at p. 233).] It may also
be mentioned that the language used in the agreement is not such as to indicate
in unmistakable terms that the time is of the essence of the contract. The
intention to treat time as the essence of the contract may be evidenced by
circumstances which are sufficiently strong to displace the normal presumption
that in a contract of sale of land stipulation as to time is not the essence of
the contract. 23. In Indira Kaur (Smt) v. Sheo Lal Kapoor (1988) 2
SCC 488 in paragraph 6 it was held as under:
...
The law is well-settled that in transactions of sale of immovable properties,
time is not the essence of the contract. 10) It is clear that in the case
of sale of immoveable property, there is no presumption as to time being the
essence of the contract. Even where the parties have expressly provided that
time is the essence of the contract, such a stipulation will have to be read
along with other provisions of the contract. For instance, if the contract was
to include clauses providing for extension of time in certain contingencies or for
payment of fine or penalty for every day or week, the work undertaken remains
unfinished on the expiry of the time provided in the contract, such clauses
would be construed as rendering ineffective the express provision relating to
the time being of the essence of contract. In the case on hand, though the
parties agreed that the sale deed is to be executed within six months, in the
last paragraph they made it clear that in the event of failure to execute the
sale deed, the earnest money will be forfeited. In such circumstances, the
above-mentioned clauses in the last three paragraphs of the agreement of sale
would render ineffective the specific provision relating to the time being the
essence of contract.
11)
This Court in Swarnam Ramachandran (Smt.) and Another vs. Aravacode Chakungal Jayapalan,
(2004) 8 SCC 689 has once again reiterated that time is not the essence of
contract relating to immoveable property. The following statement of law in para
12 are rightly applicable to the case on hand:
12.
That time is presumed not to be of essence of the contract relating to
immovable property, but it is of essence in contracts of reconveyance or
renewal of lease. The onus to plead and prove that time was the essence of the
contract is on the person alleging it, thus giving an opportunity to the other
side to adduce rebuttal evidence that time was not of essence. That when the
plaintiff pleads that time was not of essence and the defendant does not deny
it by evidence, the court is bound to accept the plea of the plaintiff.
In
cases where notice is given making time of the essence, it is duty of the court
to examine the real intention of the party giving such notice by looking at the
facts and circumstances of each case. That a vendor has no right to make time
of the essence, unless he is ready and willing to proceed to completion and
secondly, when the vendor purports to make time of the essence, the purchaser
must be guilty of such gross default as to entitle the vendor to rescind the
contract.
12) As
observed in the said decision, in the case on hand the appellants/plaintiffs
clearly established their claim to secure specific performance of the agreement
by leading cogent evidence whereas the respondent/defendant having pleaded that
time was the essence of the contract neither entered the witness box nor led
any evidence whatsoever. The High Court lost sight of the above material aspect
and the conduct of the defendant in not strengthening his plea by placing
acceptable evidence. In such circumstances, as rightly argued by learned
counsel for the appellants, the High Court should have confirmed the decree of
specific performance granted by the trial Court. On the other hand, the High
Court wrongly placed reliance on the decision of this Court in K.S. Vidyanadam
and Others vs. Vairavan, (1997) 3 SCC 1 as in the facts of that case, this
Court found that granting for specific performance was inequitable, however
such aspect of the matter was totally absent in the case on hand. Even
otherwise, para 11 of the judgment shows that the subject matter of the
property was an urban immoveable property and in such special circumstance
relaxed the general rule that time is not the essence of the contract in the
case of immoveable properties. In the case on hand, the details furnished in
the agreement clearly show that the subject- matter of the property is an
agricultural land situated in Kolhapur Dist., Maharastra. In such
circumstances, the decision in K.S. Vidyanadam and Ors. (supra) is not
applicable to the facts on hand. In the facts of the present case, which we
have already adverted to, neither the terms of agreement nor the intention of
the parties indicate that the time is an essence of the agreement. We have
already pointed that having raised such a plea the respondent even did not
bother to lead any evidence.
13) It
is true that the defendant in his written statement has made a bald claim that
the time was the essence of contract.
Even
if we accept the recital in the agreement of sale (Exh. 18) that the sale deed
has to be executed within a period of six months, there is an express provision
in the agreement itself that failure to adhere the time, the earnest money will
be forfeited. In such circumstances and in view of recital pertaining to
forfeiture of the earnest money makes it clear that time was never intended by
the parties to be of essence.
The
Constitution Bench decision in Chand Rani vs. Kamal Rani (supra) also makes it
clear that mere fixation of time within which contract is to be performed does
not make the stipulation as to the time as the essence of contract. Further, we
have already pointed out that the defendant has not bothered to prove his claim
on oath before the Court to the effect that it was the plaintiffs who avoided
performing their part of contract. All the above-mentioned material aspects
were correctly appreciated by the trial Court and unfortunately the High Court
failed to adhere to the well known principles and the conduct of the defendant.
When the third plaintiff deposed before the Court explaining their case with
reference to the recitals in the agreement of sale including the reference to
the legal notice to the defendant, in the absence of contra evidence on the
side of the defendant, we are unable to agree with the conclusion arrived at by
the High Court in non- suiting the plaintiff. The High Court commented the
conduct of the plaintiffs in praying for refund of the earnest money, namely,
Rs.20,000/- paid as advance. As rightly pointed out, the claim for refund of
earnest money is only their alternative claim. It is not in dispute that in all
suits for specific performance, the plaintiff is entitled to seek alternative
relief in the event the decree for specific performance cannot be granted for
any reason, hence there is no infirmity in the alternative plea of refund.
14) In
the light of what has been stated above, we set aside the judgment and decree
of the High Court and confirm the decree granted by the trial Court. In view of
the said conclusion, the appellants/plaintiffs are directed to deposit the
balance amount of sale consideration i.e., Rs.1,92,500/- in the trial Court
within a period of eight weeks whereupon the respondent/defendant shall execute
the sale deed of the suit lands Block No. 208 admeasuring 0.60 R and Block No.
209 admeasuring 0.40 R of Village Nagaon, Tahsil Hatkanangale as per the
agreement dated 31.07.1985. In case of failure of the defendant to execute the
sale deed, the plaintiffs shall be entitled to get the sale deed executed
through Court.
15)
The civil appeal is allowed on the above terms. However, in the facts and
circumstances of the case, there shall be no order as to costs.
Back
Pages: 1 2
