TaxTMI 
TaxTMI 
2012 (12) TMI 1170
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....intiff No.2, Narendra Jain and the other appellants who claim to be vested with a right to sue on the basis of the claims made by the original plaintiffs in the suit. It is, however, made clear at the very outset that though all such persons claiming a right to sue through the deceased plaintiffs 1 and 3 are being referred to hereinafter as the plaintiffs and an adjudication of the causes/claims espoused is being made herein the said exercise does not, in any way, recognize any right in any such impleaded 'plaintiffs' which Question(s) are left open for decision if and when so raised. 3. The pleaded case of the respective parties may now be briefly noticed. In the suit filed by the original plaintiffs it was pleaded that the defendant, who was the owner of the suit property, after inducting the plaintiff No. 1 as a tenant in respect of the half portion of the suit property at a monthly rent of Rupees three hundred w.e.f. 20.12.1970 had executed an agreement dated 22.12.1970 to sell the suit property to the said plaintiff No.1. According to the plaintiffs the price fixed under the agreement was Rs. 3,75,000/- (Rupees three lakh and seventy five thousand only) out of which an amoun....
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....70 would stand terminated and the earnest money (Rupees fifty thousand) paid shall stand forfeited. According to the plaintiffs, in response to the aforesaid notice dated 6.11.1972, the plaintiff No.1 wrote a letter dated 14.11.1972 denying the receipt of any communication from the defendant that he had applied for the tax clearance certificate or any intimation to the effect any amount is required to be paid to the Income Tax Authority for processing the matter of grant of the clearance certificate. In the aforesaid letter the plaintiff No.1 had further stated that under clause (7) of the agreement he was obliged to deposit, at the request of the defendant, any amount not exceeding the total sale consideration with the Income Tax Authorities and no further/additional amount was required to be tendered to the defendant after payment of the initial amount of Rupees Fifty Thousand. In the said letter dated 14.11.1972 the plaintiff No.1 had also reiterated his readiness to tender any payment as may be due under the aforesaid clause (7) of the agreement. As the letter dated 14.11.1972 was not responded to, the plaintiff No.1 had addressed another letter dated 15.12.1972 to the Advocate....
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....emand/request of the defendant to make available the additional amount of Rs. One lakh for the purpose of furnishing the bank guarantee to the Income Tax authorities was conveyed to the plaintiff No.1 through the common broker of the parties, one Lajjya Ram Kapur (PW-3). 6. On the pleadings of the parties the following issues were framed for trial in the suit: 1. Whether the suit is within time? 2. Whether the suit is for mis-joinder of plaintiff Nos. 2 and 3? 3. Whether the written statement has been signed and verified by a duly authorized person? If not to what effect? 4. Whether plaintiff No.1 has always been ready and willing to perform his part of the agreement dated 22.12.1970? 5. Whether the defendant has committed the breach of the agreement dated 22.12.1970? 6. Whether plaintiff No.1 has committed breach of any of the terms of the agreement dated 22.12.1977, if so, to what effect? 7. Whether the plaintiffs are entitled to specific performance of the agreement dated 22.12.1970? 8. If Issue No.7 is not proved, whether plaintiff No.1 is not entitled to refund of earnest money and interest thereon? 7. The learned trial judge by judgment dated 5.10.1983 decreed the s....
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....rbal request to the said effect allegedly made through the broker, Lajjia Ram Kapur, was received or communicated to the plaintiffs. In any event, according to learned counsel, under clause (7) of the agreement the plaintiff was obliged to make further amounts available, on the defendant's account, to the Income Tax Authorities only. Apart from the initial payment of Rupees Fifty thousand the plaintiff was not required to make any further payment directly to the defendant. The meaning attributed by the first appellate court to clause (7) of the agreement on the principle of "business efficacy" and the consequential findings on the question of readiness and willingness of the plaintiffs are plainly incorrect. Learned counsel has submitted that in such a situation, notwithstanding the expiry of long efflux of time, when the plaintiff was in no way at fault a decree of specific performance should follow, if required by suitably enhancing the value of the property. Specifically, learned counsel has indicated the willingness of the plaintiffs to offer an amount of Rs. 6 crores for the property in question as against the amount of Rs. 3.75 lakhs as mentioned in the agreement dated 22.12.....
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....of which the necessary Tax Clearance certificate (s), which is a pre-requisite for the sale of the property, could not be obtained. It is, therefore, contended that though the defendant was, at all times, ready and willing to execute the sale deed it is the plaintiff who had failed to perform his part of the bargain. Consequently, the High Court was correct in refusing the decree of specific performance. In any event, according to learned counsel, specific performance of the agreement dated 22.12.1970 ought not to be ordered by this Court at this juncture in view of the completely altered market conditions in respect of immovable property in the National Capital where the suit property is situated. It is also pointed out that the High Court had already granted refund of the part consideration (Rupees fifty thousand) paid by the plaintiff to the defendant alongwith interest at the rate of 12% from the date of payment of the said amount till the date of the realization/return of the same. The said direction, it is submitted, adequately takes care of the equities arising in the present case. 12. On the basis of the discussions that have preceded three issues, in the main, arise for o....
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....e to India on or after the date of the accrual of the cause of action. The Calcutta High Court held that Section 13 applied and that the suit was not barred by limitation. The Court was not impressed with the argument that according to this construction a defendant who was in England when a cause of action against him accrued, and has remained there ever since might be liable after an indefinite time to be sued in a Calcutta court. In Mathukanni v. Andappa[AIR 1955 Mad 96] the plaintiff and the defendant who were residents of Mannargudi in India had gone to Kaula Lampur to earn their livelihood, and while there the defendant executed a promissory note to the plaintiff on November 16, 1921. In 1925 the plaintiff brought a suit on the promissory note in the District Munsif's Court of Mannargudi. The cause of action in the suit arose outside India. A Full Bench of the Madras High Court held that the plaintiff was entitled to the benefit of Section 13 and in computing the period of limitation he was entitled to exclude the time during which the defendant was absent in Kaula Lampur. We agree with this decision. The Full Bench rightly overruled the earlier decisions in Ruthinu v. Pac....
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....on of the sale deed which was to be within three months after receipt of the necessary intimation that the tax clearance certificate has been obtained along with the copy thereof as contemplated under clause 4 of the agreement. Under Clause 7 of the agreement, the purchaser was obliged to pay to the Income Tax authorities such amount as may be desired by the vendor (not exceeding the balance sale price payable) in order to enable the vendor to get the required Wealth Tax clearance certificate. The aforesaid clause further stipulated that such money as may be paid to the Income Tax authorities, at the request of the vendor and on the vendor's account, will be deducted by the purchaser from the balance sale consideration at the time of the execution of the sale deed. It must also be noted that under the terms of the agreement between the parties apart from the payment contemplated by Clause 7 to the authority and in the manner specified therein the purchaser had no obligation to tender any further payment directly to the vendor. 17. The defendant had claimed that on 09.09.1971 he had hand delivered a letter of the even date (Exh.D/1) to the plaintiff No. 1 requesting the plaintiff t....
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.... the demand for the additional payment of Rs. 1 lakh by the defendant was clearly made by the defendant's legal notice dated 06.11.1972 which, admittedly, the plaintiff No.1 had received. In his reply dated 14.11.1972 to the said notice dated 06.11.1972 the plaintiff No.1 had unequivocally stated that under the terms of the agreement he was required to pay, at the defendant's request, further amount(s) only to the Income Tax authorities which he is ready to do, if a request is so made by the defendant. What, therefore, has to be addressed by the Court is whether the demand raised by the defendant for an additional amount of rupees one lakh for the purpose of facilitating the issuance of the Tax Clearance certificate and the refusal of the plaintiff to pay any such amount renders either of the parties in default of the terms of the agreement dated 22.12.1970. 19. Clause 7 of the agreement is in the following terms: "7. That the purchaser agree to pay to the Income Tax authorities such money as may be desired by the Vendor(not exceeding the balance sale price of the property, against the Tax dues from the Vendor to facilitate the Vendor to get the required wealth tax certificate. S....
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....ded. But only the most limited term should then be implied - the bare minimum to achieve this goal. If the contract makes business sense without the term, the courts will not imply the same. The following passage from the opinion of L.J. Bowen in the Moorcock (supra) sums up the position: "x x x x x x x x x In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances." 23. Though in an entirely different context, this court in United India Insurance Company Limited vs. Manubhai Dharamasinhbhai Gajera and others[(2008) 10 SCC 404] had considered the circumstances when reading an unexpressed term in an agreement would be justified on the basis that such a term was always and obviously intended by and between the....
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....arties, acting as prudent businessmen, appears to be clear. An obvious intent to exclude any obligation of the plaintiff to pay any further amount (beyond Rs. 50,000/-) to the defendant is clearly discernible. Consequently, resort to the principle of business efficacy by the High Court to read such an implied term in the agreement dated 22.12.1970, in our considered view, was not warranted in the facts and circumstances of the present case. 25. The principles of law on the basis of which the readiness and willingness of the plaintiff in a suit for specific performance is to be judged finds an elaborate enumeration in a recent decision of this Court in J.P. Builders and another v. A. Ramadas Rao and another[(2011) 1 SCC 429]. In the said decision several earlier cases i.e. in R.C. Chandiok vs. Chuni Lal Sabharwal[(1970) 3 SCC 140], N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao[(1995) 5 SCC 115] and P.D' Souza vs. Shondrilo Naidu[(2004) 6 SCC 649] have been noticed. To sum up, no straitjacket formula can be laid down and the test of readiness and willingness of the plaintiff would depend on his overall conduct i.e. prior and subsequent to the filing of the suit which has also to be vi....
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....lways depend on the facts and circumstances of each case. The ultimate guiding test would be the principles of fairness and reasonableness as may be dictated by the peculiar facts of any given case, which features the experienced judicial mind can perceive without any real difficulty. It must however be emphasized that efflux of time and escalation of price of property, by itself, cannot be a valid ground to deny the relief of specific performance. Such a view has been consistently adopted by this Court. By way of illustration opinions rendered in P.S. Ranakrishna Reddy v. M.K. Bhagyalakshmi[(2007) 10 SCC 231] and more recently in Narinderjit Singh v. North Star Estate Promoters Ltd.[ (2012) 5 SCC 712] may be usefully recapitulated. 29. The twin inhibiting factors identified above if are to be read as a bar to the grant of a decree of specific performance would amount to penalizing the plaintiffs for no fault on their part; to deny them the real fruits of a protracted litigation wherein the issues arising are being answered in their favour. From another perspective it may also indicate the inadequacies of the law to deal with the long delays that, at times, occur while rendering t....