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2024 (11) TMI 710
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........................... 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 this Court dated 25 August 2022. By the judgment, this Court allowed the appeal against the judgment of the High Court of Telangana dated 23 April 2021 by which the suit for specific performance was partially decreed by directing the registration of the suit property in favour of the petitioner proportionate to the extent of the consideration paid. The issue for the consideration of this Court is whether the judgment of this Court dated 25 August 2022 suffers from an error apparent on the face of the record which warrants the exercise of the review jurisdiction. A. Background 2. On 19 March 1994, Shri Debbad Narayana, Shri Vishweswara Rao (represented by the tenth to twelfth respondents who are his legal represen....
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....r 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 herein with the purchaser as already they received the agreed sale consideration from the parties of the second part herein as per the agreement dated 19th March 1994. [...] 23. The parties of the second part herein undertake on any pretext they will not make any claim for enhancing the agreed sale consideration." (emphasis supplied) 4. The first agreement to sell refers to the "original owners" as the "parties of the first part". The agreement refers to the "vendors" as the "parties to the second part". The petitioner is referred to as the "purchaser". It must also be noted that the recital to t....
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.... 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 dated 12 December 2010, the Additional District Judge dismissed the suit instituted by the petitioner. The Trial Court held that the petitioner is not entitled to a decree or specific performance for the following reasons: a. The respondents did not dispute the execution of the two agreements to sell. There is also no dispute over the identity of the property. The petitioner is only required to prove that he was always willing to perform his part of the agreement; b. It can be inferred from the evidence on record ....
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....sequence 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 limitation ; f. The petitioner is not entitled to the discretionary relief of specific performance if a false plea is made. In this case, the petitioner made three false pleas; g. The petitioner has been unable to prove that he was willing to perform his part of the contract within three years from the sale agreements and specifically, within three months according to the agreement. If the petition....
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....neous. 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 did not approach the respondents for the payment of the balance consideration merely because he could not depose the particulars of when he approached them. Further, though the first and the second respondents pleaded that they had obtained the necessary documentation as required by Clause 3 of the sale agreement in both the written statement ....
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.... 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 Clause 3 of the sale agreements were required to be completed within the stipulated time period of three months. The consequences of (in)actions are different. There are no consequences if the vendors do not produce the certificates and permissions. However, the clause spells out a con....
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....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. Though petitioner was not a party to that agreement, this court has proceeded on the incorrect premise that the 1994 agreement was between the parties; b. The Trial Court, after analysing the ev....
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....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, or, if no such date is fixed, when the plaintiff has notice ....
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....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 second part wh....
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....ecuted by the original owners in addition 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 at....
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....the principles laid down in Chand Rani (supra). To recall, in Chand Rani (supra), 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 ....
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....the 2018 amendment read as follows : "10. Cases in which specific performance of contract enforceable.- Except as 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 judg....
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....which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant. Explanation.- For the purposes of clause (c),- (i) where a contract involved the payment of money, it is not essential for the plaintiff to actually 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.....
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....nd they are not informed to the plaintiff and that they have secured such certificates." ( emphasis supplied ) 39. In the appeal, the High Court categorically noted that the above finding of the trial court was not challenged: "40. It is also pertinent to note about categorical admission by the defendants 6 & 8 that they have not obtained certificates 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 dep....
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....opinion that this is a fit case for this Court to exercise its discretion to direct specific performance. G. Lis pendens 43. The respondents submitted that a sale of the suit property was executed after the judgment of this Court (25 August 2022) and before the review petition was registered (13 December 2022). It was submitted that the third party is in possession and enjoyment of the suit 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, J....
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.... any period of limitation prescribed for the execution thereof by any law for the time being in force." ( emphasis supplied ) 46. The following conditions ought to be fulfilled for the doctrine of lis pendens to apply: a. There must be a pending suit or proceeding; b. The suit or proceeding must be pending in a competent court; c. The suit or proceeding must not be collusive A collusive suit is not a real suit but a sham where 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 i....
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....secution". The Amending Act also included the Explanation defining the expression "pendency of suit or proceeding". "Pendency" is defined to commence from the "date of institution" until the "disposal". The argument of the respondents that the doctrine of lis pendens does not apply because the petition for review was lying in the registry in a defective state cannot be accepted. The review proceedings were "instituted" within the period of limitation of thirty days. The doctrine of lis pendens kicks in at the stage of "institution" and not at the stage when notice 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....