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TaxTMI 
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2024 (11) TMI 1636
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....vide judgment and decree dated 17th December, 2007. Upon a first appeal [A.S.811 of 2008] being carried under section 96 of the Code of Civil Procedure, 1908 [CPC, hereafter] by the buyer before the High Court of Judicature at Madras [High Court, hereafter], the same succeeded vide judgment and decree dated 21st October, 2011 [impugned judgment, hereafter]. The High Court reversed the judgment and decree of dismissal of the suit and granted decree for specific performance. The sellers have taken exception to the first appellate judgment and decree in this appeal by special leave, granted on 5th April, 2013. 2. Civil Appeal No.3016 / 2013 is also an appeal against the impugned judgment, special leave wherefor was also granted on 5th April, 2013. It is at the instance of a company [subsequent purchaser, hereafter] who had purchased the property, forming the subject of the Agreement, from the sellers when the first appeal was pending before the High Court without any order restraining the sellers to alienate the same. Upon such purchase, the subsequent purchaser derived knowledge of pendency of the first appeal; thus, it applied for and was impleaded as the eight respondent therein....
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....spite multiple requests, the buyer did not come forward to execute the sale deed. For these reasons, the Agreement was cancelled vide letter dated 23rd February, 2006 and the pay order of Rs. 25 lakh was returned. e. Despite the letter dated 23rd February, 2006 whereby the sellers cancelled the Agreement (reiterated vide letter dated 2nd March, 2006), the sellers vide a telegram dated 11th March, 2006 again expressed interest to sell the property and conveyed that they were ready to sell it; consequently, the buyer was called upon to complete the sale before 24th March, 2006. f. The buyer, claiming that she was out of station, sent a letter on 18th March, 2006. She asserted that as per the Agreement, she had four months' time from the date of vacating of the property by all the tenants. A request was made calling upon the sellers to bring the original documents and 'encumbrance certificate for 30 years' to enable her advocate prepare the sale deed. g. The sellers then sent a letter dated 23rd March, 2006 asserting therein that the period of four months is to be counted from the date of the Agreement, and the demand for encumbrance certificate ....
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....r dated 10th August, 2006, the buyer called upon the sellers to collect the pay order dated 11th February, 2006 for Rs. 25 lakh from the buyer's office, but the sellers did not collect the same. The buyer then enclosed the pay order with her letter dated 10th August, 2006 and sent it to the sellers who, vide letter dated 14th August, 2006 replied that the Agreement had already been cancelled and that the buyer, who earlier was not ready and willing, is now trying to grab the property as the value of the property has gone up multiple times. 4. It is in this factual background that litigation between the buyer and the seller commenced with institution of the suit by the buyer before the Court of the District Judge of Coimbatore. The suit was later transferred by the District Judge to the Court of the Additional District Judge (Fast Track Court I) [Trial Court, hereafter]. Based on the averments in the plaint, which refer to more or less what we have narrated above in paragraph 3, relief was claimed in the following terms: a. To pass a decree for specific performance of the Agreement dated 20th January, 2005 or in the alternate a decree for refund of advance amount of ....
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....te of such Agreement, i.e., 20th January, 2005. Admittedly, the buyer did not make the payment as agreed by and between the parties and time being the essence of the contract, the Trial Court was justified in dismissing the suit (although on the point of time being the essence of the contract, it had held otherwise). 8.2 Secondly, Mr. Dwivedi invited our attention to the letter dated 23rd February, 2006 sent by the sellers to the buyer whereby the sellers cancelled the Agreement and refunded the advance amount. The relevant part of the said letter is reproduced below: "......... You failed to pay the balance sale consideration within the period of 4 months and get the sale deed executed." In reply to the above, the buyer sent a letter dated 24th February, 2006 to the sellers. Nowhere in this reply letter did the buyer expressly mention that the period of four months is to be counted from the date of vacation of the property by the tenants. Hence, the assertion that the period of four months was to be counted from the date of vacation is merely an afterthought. 8.3 Thirdly, Mr. Dwivedi asserted that vide telegram dated 11th March, 2006, the seller....
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.... 8.6 Sixthly, Mr. Dwivedi argued that the buyer had taken prevaricating stands and, therefore, is not entitled to the discretionary relief of specific performance. He drew our attention to the letter dated 24th February, 2006 wherein the buyer stated: "It appears that only few days ago, the tenant has vacated and the portion is kept under lock and key." This shows that the buyer was aware of the fact of vacation of the property by the last tenant days prior to 24th February, 2006. However, in her letter dated 18th March, 2006, she stated that: "You have vacated all the tenants only on 02.02.2006 and it has been officially intimated to me only on 04.03.2006 by your letter dated 02.03.2006". To show the alleged wrongful conduct of the buyer, our attention was drawn to another instance. In her reply dated 18th March 2006 to the telegram, the buyer stated: "...... I am in receipt of your telegram dated 11.03.2006 which has been received by my office and due to my non-availability in the town I could not take immediate action in this ......." However, when the buyer was confronted with Exs. B1 and B2 being news items appearing i....
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....ana Mukherjee, learned senior counsel for the subsequent purchaser adopted the submissions of Mr. Dwivedi and submitted that that the conduct of the buyer disentitles her from claiming the relief of specific performance; therefore, the Trial Court rightly dismissed the suit. That apart, the subsequent purchaser being a bona fide purchaser of the property for value, this Court may not disturb the status quo. 10. Mr. Guru Krishna Kumar, learned senior counsel for the buyer, argued that the view taken by the High Court is correct, well-reasoned, not perverse and a plausible view; hence, it does not warrant interference. 10.1 First, Mr. Kumar contended that both the Trial Court and High Court have concurrently found that time is not the essence of the contract. While inviting our attention to several documents on record, Mr. Kumar contended that the following conduct of the sellers itself evinced that for them, time was not of the essence: i. the sellers received payments on 5th June 2004 and 24th July 2005, which is after the final date that they say was fixed for performance of the Agreement, i.e. 19th May 2005; ii. even though they purportedly cancelled....
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....o the Division Bench, it must be made to pay this amount to the respondents within a period of eight weeks from the date of this judgment." (emphasis supplied) 10.3 Thirdly, Mr. Kumar asserted that the buyer was always ready and willing to perform her part of the bargain. In fact, the buyer's obligation to pay the balance consideration was to be fulfilled only after the sellers had performed their part of the bargain, which was to be ready to hand over the vacant possession of the property by evicting the tenants. Hence, without first performing their reciprocal promises, the sellers could not have called upon the buyer to pay the balance sale consideration. On the contrary, it was the sellers who were not ready to perform their part. Vide letter dated 22nd April 2006, the buyer demanded the sellers to produce the original title deeds which was refused by the sellers vide their letter dated 26th April 2006. Even though there was no express condition in the Agreement for production of original title deeds, but such condition is implied in the Agreement. Hence, without the sellers having first complied with their promise, they could not have called upon the buyer to p....
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....ased to be stable) ..... This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now. 37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the ven....
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....he ordinary rule is that specific performance should be granted. It ought to be denied only when equitable considerations point to its refusal and the circumstances show that damages would constitute an adequate relief. 16. This Court in N.P. Thirugnanam v. R. Jagan Mohan Rao (Dr) [(1995) 5 SCC 115] while reiterating that the remedy of specific performance is equitable in nature and that granting or refusing specific performance is within the discretion of the court, had the occasion to observe: "5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short 'the Act'). Under Section 20, the court is not bound to grant the relief just because there was a valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which ....
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....thers to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the considerations to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen." 18. In Kamal Kumar v. Premlata Joshi [(2019) 3 SCC 793], one finds the following instructive passage: "7. It is a settled principle of law that the grant of relief of specific performance is a discretionary and equitable relief. The material questions, which are required to be gone into for grant of the relief of specific performance, are: 7.1. First, whether there exists a valid and concluded contract between the parties for sale/pur....
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....consideration the conduct of the plaintiff prior, and subsequent to the filing of the suit along with other attending circumstances. The amount which he has to pay the defendant must be of necessity to be proved to be available. Right from the date of the execution of the contract till the date of decree, he must prove that he is ready and willing to perform his part of the contract. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready to perform his contract. 21. Requisite pleadings and proof that are required of a plaintiff to succeed in a suit for specific performance are succinctly captured in this Court's decision of recent origin in U.N. Krishnamurthy v. A.M. Krishnamurthy [(2023) 11 SCC 775]. The relevant passage reads: "24. To aver and prove readiness and willingness to perform an obligation to pay money, in terms of a contract, the plaintiff would have to make specific statements in the plaint and adduce evidence to show availability of funds to make payment in terms of the contract in time. In other words, the plaintiff would have to plead that the plaintiff had sufficient funds or was in a position to r....
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....rima facie finds by mere perusal of plaint allegations that the suit is barred by any express provision of law or is not legally maintainable due to any legal provision, a judicial notice can be taken to avoid abuse of judicial process in prosecuting such suit. However, such was not the case therein. 25. What follows from A. Kanthamani (supra) is that unless an issue as to maintainability is framed by the Trial Court, the suit cannot be held to be not maintainable at the appellate stage only because appropriate declaratory relief has not been prayed. ON INCONSISTENT CLAUSES IN AN AGREEMENT 26. It is not an infrequent happening that two or more clauses in a contract could, in some measure, be inconsistent with each other, - the inconsistency arising because the clauses cannot sensibly be read together. Lord Wrenbury in Forbes v. Git [[1922] 1 A.C. 256] applied the following principle: "The principle of law to be applied may be stated in a few words. If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails. In th....
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....ference for such proposition is traceable to Forbes v. Git as approvingly taken note of by a three-Judge Bench of this Court in Radha Sundar Dutta v. Mohd. Jahadur Rahim. However, we have been able, as noted above, to reconcile the three clauses in the current scenario." ANALYSIS AND REASONS 29. A suit for specific performance of a contract for sale, normally, is premised on a written agreement between the contracting parties, signifying a meeting of minds of two persons or more. Terms of the agreement, which are reasonably ascertainable from the written document, assume extreme relevance. After all, compliance with other requisites takes the shape of a concluded contract and should there be no vitiating factor, the parties are bound thereby. 30. The first point that we need to examine is the effect of the two clauses of the Agreement and to apply the law laid down by this Court in Radha Sundar Dutta (supra) and Bharat Sher Singh Kalsia (supra). The said clauses read as follows: "The Second party will have to pay the balance sale price within four months from today and obtain a sale deed either in his name or in the name of persons nominated by him at his own expe....
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.... all the tenants, she started raising the bogey of failure of the sellers to share with her the 'encumbrance certificate'. Importantly, the Agreement did not record that the sellers were under any obligation to share such certificate. Thus, in the absence of such obligation, one has to presume that the buyer was duly satisfied with the sellers' title to the property and as such did not, consciously, insist on making such obligation a part of the Agreement of sharing of the `encumbrance certificate' prior to performance of the agreed terms. It is common knowledge that none interested in buying an expensive property would agree to terms leaving himself/herself at a potential risk of facing litigation in future. Even in the absence of an express term and if it were accepted that the obligation is an implied requirement of the Agreement, the buyer would have done well to close the deal if the sellers were taking advantage of the omission in the Agreement, particularly when at the time she raised such objection the entire money received in advance had been returned by the sellers to her. This is one aspect of the matter. 35. The other aspect is this. From the document....
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....o why the buyer would hold on to the demand draft and not return it earlier if she was genuinely interested in purchasing the property. 38. Such conduct of the buyer, seen cumulatively, does not inspire confidence in granting her the discretionary relief of specific performance. 39. The question posed for an answer is, thus, decided against the buyer. 40. Having held thus, allowing the appeal is the inevitable result. However, before we part, there seems to be a discordant note struck by the decision in A. Kanthamani (supra) while distinguishing I.S. Sikandar (supra), which could create uncertainty and confusion. It is, therefore, considered worthwhile to attempt and clear the same. 41. A comprehensive reading of the two decisions reveals that in a fact scenario where the vendor unliterally cancels an agreement for sale, the vendee who is seeking specific performance of such agreement ought to seek declaratory relief to the effect that the cancellation is bad and not binding on the vendee. This is because an agreement, which has been cancelled, would be rendered non-existent in the eyes of law and such a non-existent agreement could not possibly be enforced before a cou....
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.... our deduction is this. An issue of maintainability of a suit strikes at the root of the proceedings initiated by filing of the plaint as per requirements of Order VII Rule 1, CPC. If a suit is barred by law, the trial court has absolutely no jurisdiction to entertain and try it. However, even though a given case might not attract the bar envisaged by section 9, CPC, it is obligatory for a trial court seized of a suit to inquire and ascertain whether the jurisdictional fact does, in fact, exist to enable it (the trial court) to proceed to trial and consider granting relief to the plaintiff as claimed. No higher court, much less the Supreme Court, should feel constrained to interfere with a decree granting relief on the specious ground that the parties were not put specifically on notice in respect of a particular line of attack/defence on which success/failure of the suit depends, more particularly an issue touching the authority of the trial court to grant relief if the 'jurisdictional fact' imperative for granting relief had not been satisfied. It is fundamental, as held in Shrisht Dhawan (supra), that assumption of jurisdiction/refusal to assume jurisdiction would depend....