IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1413 of 2004 With CIVIL APPLICATION No. 8820 of 2007 In FIRST APPEAL No. 1413 of 2004 With CIVIL APPLICATION No. 8333 of 2008 In FIRST APPEAL No. 1413 of 2004 With CIVIL APPLICATION No. 13391 of 2011 In FIRST APPEAL No. 1413 of 2004 For Approval and Signature:
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA AND HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================== ===============
========================================== =============== UNION BEARINGS (INDIA) LTD.
Versus ARVINDBHAI CHHAGANBHAI PATEL & ANR.
========================================== =============== Appearance :
MR ANSHIN H DESAI for Appellants. MR YATIN SONI for respondent No.1 MR SM SHAH with MR MEHUL S SHAH for respondent No.2 ========================================== =============== Date : 20/01/2012
CAV JUDGMENT
(Per : HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA)
1. This First Appeal is at the instance of an unsuccessful plaintiff in a suit for specific performance of contract and is directed against the judgment and decree dated April 28, 2004 passed by the learned Civil Judge, Senior Division, at Gondal, District- Rajkot, in Special Civil Suit No. 168 of 1996 by which the learned trial Judge dismissed the suit filed by the plaintiff with costs.
2. Being dissatisfied, the plaintiff has come up with the present appeal.
3. The case made out by the appellant in the plaint may be summed up thus:
[a]. The plaintiff is a Company registered under the Companies Act, 1956. For the progress of the activities of the Company, the appellant wanted to purchase some agricultural land in the village of Shahpar to establish an industry. The defendant told the plaintiff that he wanted to sell his land situated in that area and as such, it was decided by the parties to enter into an agreement for sale.
[b]. The defendant had told the plaintiff that the agricultural land bearing survey No. 272/1 measuring Acre 8 – 17 gunthas was owned by him in his absolute ownership and consequently, a contract to sell the said land to the plaintiff for Rs.62,76,625/- had taken place between the parties on November 1, 1994.
[c]. By way of earnest money, the plaintiff paid a sum of Rs.15, 51,551. 51 paise and the written agreement of sale mentioned above was registered in the Sub-Registrar's office at Gondal on November 1, 1994.
[d]. According to the said agreement, the sale-deed was required to be executed within a month after the plaintiff had acquired the required permission from the Deputy Collector and the defendant got the Income Tax Clearance Certificate.
[e]. According to the plaintiff, it was at all material time ready and willing to perform its part of the contract but the defendant had concealed some material facts about his ownership and by notice dated March 9, 1996 intimated the plaintiff that the said agreement of sale was voidable and consequently, revoked the agreement by informing that the contract stood cancelled.
[f]. According to the plaintiff, it had acquired the necessary permission from the Government but on the contrary, the defendant had not obtained the required permission under the provisions of the Income Tax Act, and as the price of the land, which was the subject-matter of the agreement of sale, was increasing day-by-day, the defendant was trying to transfer the said land to some other third-party at a higher price. Hence, the plaintiff was entitled to a decree for specific performance of the contract. The plaintiff also prayed for recovery of possession pursuant to the agreement and recovery of Rs.62, 76,625/- as the amount of damages for the breach of agreement, with interest.
4. The said suit was contested by the defendant by filing Written Statement thereby denying the material allegations made in the plaint, and the defence of the defendant may be epitomized thus:
[a]. As the plaintiff did not come before the Court with clean hands, it was not entitled to the equitable relief prayed for in the suit.
[b]. The agreement was frustrated because of the plaintiff's inaction and inability to perform its part of the contract.
[c]. The plaintiff had no financial capacity to pay the huge amount of Rs.2,69,00,000/- to the Gujarat Small Industries Corporation.
[d]. Time was the essence of the contract and due to the inability on the part of the plaintiff to perform its part of the contract, the contract was cancelled.
[e]. According to the order dated December 18, 1995, the permission granted by the Deputy Collector, Rajkot to the plaintiff was valid only for six months and as such, according to the contract executed between the parties, they were required to execute a registered sale-deed within June 17, 1996 but the plaintiff was not in a position to purchase the land within the said period for its financial deficiency.
[f]. As the plaintiff had failed to make payment of the balance amount of consideration money within the period prescribed in the agreement, the defendant was entitled to forfeit the amount of Earnest Money.
[g]. The plaintiff was required to execute sale-deed within a month after the defendant intimated the plaintiff about the clearance from the Income Tax Authority and thus, time was the essence of the contract.
5. At the time of hearing of the suit, on behalf of the plaintiff, Mr.
Madhusudan Nenshibhai Kakkad, its Managing Director, was examined as PW. No.1, one Romeshkumar Shaidas Verma was examined as PW No.2, and one Venkat Krishnya Ramkrushnya was examined as PW No.3 which were marked as Exh. Nos. 73, 112 and 131 respectively.
6. On the other hand, the defendant himself was examined, vide Exh. 161 but no other witness was examined on behalf of the defendant in support of his defence.
7. As pointed out earlier, the learned trial Judge, on consideration of the materials on record, came to the conclusion that the suit was liable to be dismissed inasmuch as “the time was the essence of the contract” and the plaintiff failed to perform its part of the contract within the time fixed in the agreement for sale. The learned trial Judge further held that the plaintiff was not ready and willing to perform its part of the contract at the relevant point of time, and as such, was not entitled to get any relief claimed in the suit. The learned trial Judge further held that according to the terms and conditions of the agreement, the defendant was entitled to forfeit the amount of earnest money. The suit was, thus, dismissed.
8. Mr. Desai, the learned counsel appearing on behalf of the plaintiff-appellant, has vehemently attacked the findings of the learned trial Judge and contended that the findings arrived at by the learned trial Judge was vitiated either by error of facts or of law.
8.1 Mr. Desai, at the very outset, contends that on a mere reading of the agreement it would appear that time was not the essence of the contract. According to Mr. Desai, it is settled law that in an agreement for sale of immovable property, time should not be presumed to be the essence of the contract, and it is for the defendant to prove by leading evidence that in the facts of the case, time was really the essence of the contract. According to Mr. Desai, no evidence has been adduced nor was any circumstance put forward indicating that in the facts of the present case, time was the essence of the contract. Mr. Desai, therefore, submits that the findings recorded by the learned trial Judge that time was the essence of the contract was based on a total non-consideration of the vital pieces of evidence adduced by the plaintiff.
8.2 According to Mr. Desai, even the Income-tax-clearance certificate produced by the defendant indicates that he was not the owner of the subject-matter of the suit but it was a joint Hindu Family of which the plaintiff was the Karta was the owner. Thus, Mr. Desai contends that the defendant failed to prove that he, in his personal capacity, was the owner and consequently, it was the defendant who failed to prove his ownership in the land as stated in the agreement. For the above reason, according to Mr. Desai, even if it is assumed for the sake of argument that time was the essence of the contract, the time to perform the part of the plaintiff to pay the balance amount did not start running so long the defendant was able to produce the Income- tax-clearance certificate in his own name.
8.3 Mr. Desai next contends that in the case before us, his client has produced enough materials indicating that it had the sufficient financial ability to perform its part of the contract and it is not necessary that the plaintiff must deposit the entire amount of consideration money in the court. According to Mr. Desai, all that is necessary is to prove that, if called upon by the Court to deposit, or if a decree is passed, the plaintiff would be in a position to procure the amount it is required to deposit. By referring to the financial position of the plaintiff as reflected from its balance-sheet, Mr. Desai contends that the plaintiff had enough assets and it was not impossible for the appellant to procure the balance amount of money. Mr. Desai, therefore, submits that the findings of the learned trial Judge that the plaintiff failed to prove that it had the financial capability to pay the balance amount of money was a perverse finding of fact.
8.4 Lastly, Mr. Desai contends that even if it is assumed for the sake of arguments that his client was not entitled to a decree for specific performance of contract, at least his client was entitled to get refund of the earnest money with interest as no evidence has been adduced by the defendant justifying confiscation of the earnest money admittedly received by the defendant. Mr. Desai, by way of alternative argument, submits that if we find that it is not a fit case for grant of specific performance of contract, we should at least grant a decree for refund of earnest money with interest.
8.5 In support of his contentions, Mr. Desai placed strong reliance on the following judgments:
1. NIRMALA ANAND vs. ADVENT CORPORATION (P) LTD.
reported in (2002) 8 SCC 146
2. JP BUILDERS AND ANOTHER vs. A. RAMADAS RAO AND ANOTHER - reported in (2011) 1 SCC 429
3. FAQUIR CHAND AND ANOTHER vs. SUDESH KUMARI -
reported in (2006) 12 SCC 146
4. GOBIND RAM vs. GIAN CHAND reported in (2000) 7 SCC 548
5. P.D'SOUZA vs. SHONDRILO NAIDU reported in (2004) 6 SCC 649
6. P.S. RANAKRISHNA REDDY vs. M.K. BHAGYALAKSHMI AND ANOTHER - reported in (2007) 10 SCC 231
7. INTERNATIONAL CONTRACTORS LTD. vs. PRASANTA KUMAR SUR [DECEASED] &ORS.
reported in AIR 1962 SC 77
8. SUKHBIR SINGH AND OTHERS vs. BRIJ PAL SINGH & ORS - reported in AIR 1996 SC 2510
9. IN RE: KUTTADAN VELAYUDHAN AND ORS.
reported in AIR 2001 KERALA 123
10. VISHWA NATH SHARMA vs. SHYAM SHANKER GOELA AND ANOTHER - reported in (2007) 10 SCC 595
11. GURUSWAMY NADAR vs. P L;AKSHMI AMMAL [D] THROUGH LEGAL HEIRS reported (2008) 5 SCC 796.
12. BALASAHEB DAYANDERO NAIK vs. APPASAHEB DATTARAYA PAWAR – reported in (2008) 4 SCC 464
13. AMTESHWAR ANAND vs. VIRENDER MOHAN SINGH reported in (2006) 1 SCC 148
14. MADHYA PRADESH HOUSING BOARD vs. PROGRESSIVE WRITERS AND PUBLISHERS reported in (2009) SCC 678.
15. SWARNAM RAMCHANDRAN v/s ARAVACODE CHAKUNGAL JAYAPALAN reported in (2004) 8 SCC 689.
16. R.C. CHANDLOK v/s. CHUNILAL SABHARWAL reported in 1970 (3) SCC 140.
17. SILVEY AND OTHERS vs. ARUN VARGHESE & ANR reported in (2008) 11 SCC 45
18. MRS. CHANDNEE WIDYA VATI MADDEN vs. DR. C.L. KATIAL AND OTHERS reported in AIR 1964 SC 978
19. N. SRINIVASA vs. KUTTUKARAN MACHINE TOOLS reported in (2009) SCC 182
20. MOTILAL JAIN VS. SMT. RAMDASI DEVI reported in AIR 2000 SC 2408.
21. ETWARI DEVI & ORS. vs. PARVATI DEVI reported in (2006) 2 SCC 327
22. RAMAN KUTTY GUPTAN vs. AVARA reported in (1994) 2 SCC 642
23. MIRHILWAH KUMARI & ANR. vs. PREM BEHARI KHARE reported in (1989) 2 SCC 95.
24. AMRESH TIWARI v/s. LALTA PRASAD DUBEY & ANR.
Reported in (2000) 4 SCC 440.
9. Mr. Shah, learned advocate appearing on behalf of the subsequent purchaser from the defendant, on the other hand, has opposed the aforesaid contentions of Mr. Desai and has contended that in the facts of the present case, the learned trial Judge has rightly concluded that time was the essence of contract and that the plaintiff was not at all ready and willing to perform its part of the contract. Mr. Shah further contends that it would appear from the letter of the plaintiff dated March 1, 1996, Exh- 60, that it expressly admitted its financial inability at the relevant point of time, and had prayed for extension of time till March 31, 1996. By referring to the application being Exh. - 68 at page 120 of the paper book, Mr. Shah points out that the permission obtained by the plaintiff from Deputy Collector had lapsed in the month of June 1996 and thereafter, the plaintiff prayed for extension of the permission by 90 days, which was not granted and thus, in the month of December, 1996 when the suit was filed for specific performance of contract, the plaintiff was not in a position to lawfully perform its part of the contract. Mr. Shah further submits that his client had produced the Income-Tax-Clearance Certificate and the plaintiff was willing to even purchase the property in spite of the knowledge that it was the joint Hindu Family of the defendant which was the real owner of the property. According to Mr. Shah, the plea taken by Mr. Desai that the defendant was not the owner of the property, therefore, is not tenable in the eye of law. Mr. Shah submits that time being the essence of the contract, and the plaintiff having failed to perform its part of the contract within the time fixed by the contract, his client was entitled to confiscate the amount, and, therefore, the learned trial Judge did not commit any illegality in dismissing the suit in its entirety.
9.1 Mr. Shah further contends that it would appear from the materials on record that even before this Court, on the application of the plaintiff for injunction, this Court directed the plaintiff to deposit the balance amount of money on condition of grant of injunction but the plaintiff failed to deposit that amount. The aforesaid fact, according to Mr. Shah, indicated the plaintiff's inability to perform its part of the contract even at the appellate stage of the proceedings. Mr. Shah, therefore, prays for dismissal of the appeal.
9.2 In support of his contentions, Mr. Shah has placed reliance on the following judgments.
1. N.P. THIRUGNANAM vs. R. JAGAN MOHAN RAO reported in AIR 1996 SC 116
2. PRAMOD BUILDINGS & DEVELOPERS (P) LTD. vs. SHANTA CHOPRA reported in (2011) 4 SCC 741
3. BAL KRISHNA vs. BHAGWAN DAS reported in AIR 2008 SC 1786
4. INDERCHAND JAIN (D) THROUGH LRS. vs. MOTIALAL (D) THROUGH LRS.
reported in 2009 AIAR (CIVIL) 603
5. A.K. LAKSHMIPATHY (D) & ORS. vs. RAI SAHEB PANNALAL - reported in 2010 AIAR (CIVIL) 25
6. FAQUIR CHAND AND ANOTHER vs. SUDESH KUMARI reported in (2006) 12 SCC 146
7. SATYA NARAIN MISRA AND ANOTHER vs. HAR PRATAP SINGH (DEAD) BY LRS. & ORS.
reported in (2007) 15 SCC 585
10. Therefore, the questions that fall for determination in this appeal are:
1. Whether time was the essence of contract involved in this appeal.
2. Whether the plaintiff was at all material point of time ready and willing to perform his part of the contract.
3. Whether the learned trial Judge was justified in dismissing the suit in its entirety even without granting any relief of refund of earnest money.
11. Before answering the first question referred to above, we may appropriately refer to the following observations of the Supreme Court in the case of Gomathinayagam Pillai and others v. Palaniswami Nadar reported in AIR 1967 SC 868 where the said court laid down the following proposition of law to be followed by the courts in deciding whether time is really the essence of a contract:
“Section 55 of the Contract Act which deals with the consequences of failure to perform an executory contract at or before the stipulated time provides by the first paragraph:
"When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract."
It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence. In Jamshed Kodaram Irani v. Burjorji Dhunjibhai, ILR 40 Bom 289 : (AIR 1915 PC 83) the Judicial Committee of the Privy Council observed that the principle underlying S. 55 of the Contract Act did not differ from those which obtained under the law of England as regards contracts for sale of land. The Judicial Committee observed:
"Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. Their Lordships are of opinion that this is the doctrine which the Section of the Indian Statute adopts and embodies in reference to sales of land. It may be stated concisely in the language used by Lord Cairns in Tilley v. Thomas, (1867) 3 Ch A 61 :
'The construction is, and must be, in equity the same as in a Court of law. A Court of equity will indeed relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps towards completion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts v. Berry, (1853) 3 De G. M. and G 284) there is nothing in the 'express stipulations between the parties, the nature of the property, or the surrounding circumstances', which would make it inequitable to interfere with and modify the legal right. This is what is meant, and all that is meant, when it is said that in equity time is not of the essence of the contract. Of the three grounds . . . mentioned by Lord Justice Turner 'express stipulations' requires no comment. The 'nature of the property' is illustrated by the case of reversions, mines, or trades. The 'surrounding circumstances' must depend on the facts of each particular case'.
Their Lordships will add to the statement just quoted these observations. The special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regards the time of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observation of the time limits prescribed in a fashion which is unmistakable. The language will have this effect if it plainly excludes the notion that these time limits were of merely secondary importance in the bargain, and that to disregard them world be to disregard nothing that lay as its foundation "Prima facie, equity treats the importance of such time limits as being subordinate to the main purpose of the parties, and it will enjoin specific performance notwithstanding that from the point of view of a Court of Law the contract has not been literally performed by the plaintiff as regards the time limit specified".”
12. Thus, even if it is written in a contract that the time would be the essence of the contract, a party to such a contract can by giving evidence prove that in the facts of the said case time was not the essence of the contract. Similarly, even if nothing is written in mandatory form in the contract, a party to the same by giving evidence prove that time was the essence of the contract. For instance, if in a given case for the purpose of medical treatment of the son of the owner of a property who was in critical condition, he required money for sending him to a foreign country for the treatment, the vendor can successfully resist a suit for specific performance of contract by proving that only 72 hours were the time-limit within which the plaintiff should have paid the amount and for such non-payment within 72 hours he had sold the property to a third party or procured the money from other source and sent his son to the foreign country for treatment as he was not in a position to wait any further.
13. In the case before us, the defendant failed to prove by giving any evidence that there was any such circumstance which would go to show that time was the essence of the contract. As provided in the Specific Relief Act, in case of sale of immovable property, the court will presume that time was not the essence of the contract unless contrary is proved. Thus, the learned trial judge erred in law in holding that the time was the essence of the contract.
14. It is, however, settled law that even if time was not the essence of the contract, the plaintiff must prove that at all material time he was ready and willing to perform his part of the contract in order to succeed in an action for specific performance of contract.
15. We, therefore, now propose to consider whether the plaintiff has been able to prove that it was at all material time ready and willing to perform its part of the contract justifying granting of a decree for specific performance of contract.
16. After hearing the learned counsel for the parties and after going through the materials on record, we find that the plaintiff by its letter dated March 1, 1996, (Exh-60) categorically admitted its financial inability to pay the huge amount of balance consideration money at that point of time and had prayed for extension of time till March 31, 1996. It further appears from Exh.–56, a letter written by the appellant to the Deputy Collector dated June 2, 1996 that it prayed for extension of time for execution of the deed pursuant to the permission earlier granted on December 18, 1995, which was valid for six month from the date of grant of permission. In the said letter, it was specifically stated that due to internal financial problem, they could not get the sale deed executed. Exh. - 67 dated June 29--/July 1, 1996, indicates that the Deputy Collector extended the time by further period of 90 days. Exh- 68 dated October 1, 1996 discloses that the appellant prayed for further extension of time by 90 days. In the said letter to the Deputy Collector, it was specifically mentioned that because of their financial problem they could not get the sale-deed executed. In the said letter, it was indicated that their financial problem had increased. Further extension was, however, not granted and thus, after September 30, 1996 the permission earlier granted in favour of the plaintiff lapsed and no further permission was obtained as would appear from the admission made by the P.W- 1, Exh- 73 ( vide last 5 lines of page 257 of the paper book). Therefore, on December 11, 1996, the date of filing of the suit, there was no subsisting permission of the government to use the land for industrial purpose and the plaintiff was not in a position to lawfully perform its part of the contract. Therefore, although subsequently the plaintiff was financially able to pay the balance amount of consideration money, at the relevant time, when the defendant cancelled the agreement, the plaintiff was not in a position to perform its part of the contract and even at the time of filing of the suit, the permission granted by the State in favour of the plaintiff to purchase the property had lapsed.
17. The next question is whether the defendant was justified in canceling the agreement and confiscating the earnest money admittedly paid by the plaintiff.
18. On consideration of the materials on record we find that the defendant has also not performed his part of the contract by producing Income-tax-clearance certificate. The certificate that has been produced indicates that the said certificate was granted for sale of the suit property given to the defendant as the Karta of the Hindu Joint Family whereas the agreement was not entered in that capacity. The agreement in question describes the defendant as the owner in his personal capacity. Thus, the defendant failed to perform his part of the contract by producing the clearance certificate in his own name. Consequently, there was no justification of cancelling the agreement and confiscating the earnest money.
19. Although the P.W- 1 in his evidence expressed his willingness to purchase the property knowing fully well that the Hindu Joint Family was the owner of the property, such subsequent admission of P.W- 1 could not enable the defendant to justify cancellation of the agreement and confiscation of the earnest money made earlier when time was not the essence of contract.
20. We now propose to deal with the decisions cited by the learned counsel for the parties.
21. On the question of readiness and willingness on the part of a plaintiff in a suit for specific performance of a contract, Mr. Desai relied upon the decision of the Supreme Court in the case of Motilal Jain [supra] and Etwari Devi and others [supra].
22. In the case of Motilal Jain [supra], it was held by the Supreme Court that averment as to readiness and willingness in a plaint is sufficient if the plaint, read as a whole, clearly indicated that the plaintiff was always and was still ready and willing to fulfill his part of obligation and that such obligation was not a mathematical formula capable of being expressed only in certain specific words or terms. In the facts of the said case, it was held that where the appellant plaintiff had paid about two-thirds of the consideration settled at the time of execution of the sale of the suit property and had sent three notices to the defendant- respondent, all of which was set out in the plaint, the High Court erred in setting aside the decree for specific performance on the ground of lack of averments in terms of Section 16[6] of the Specific Relief Act.
23. In the case of Etwaridevi and others [supra], the Supreme Court was dealing with an appeal where decree passed by the trial court and upheld by the lower appellate court was reversed in Second Appeal by High Court on the ground that the plaintiff had neither specifically pleaded, nor adduced evidence, to establish his readiness and willingness in terms of Section 16[c] of the Specific Relief Act. The High Court further observed that certain amount directed to be deposited by the plaintiff was not deposited within the time granted. In such a case, the Supreme Court held that all these findings of the High Court were found to be contrary to the materials on record and were, thus, liable to be set aside.
24. In our opinion, the aforesaid two decisions cannot have any application to the facts of the present case where the plaintiff itself prayed for extension of time for execution of sale-deed on the ground of financial difficulty. It appears that the permission granted by the Government in favour of the plaintiff expired and it filed the suit at a point of time when even the permission granted by the Government in its favour was not subsisting, as within the time granted by the government to conclude the sale, it could not procure money. We, therefore, find that those two decisions do not support Mr. Desai’s client in the facts of the present case.
25. On the other hand, in the case of N.P. Thirugnanam [supra], relied upon by Mr. Shah, it was held by the Supreme Court that to adjudge whether the plaintiff is ready and willing to perform his part of contract, the Court should take into consideration the conduct of the plaintiff prior and subsequent to filing of the suit along with other attending circumstances. It was further held that the amount of consideration which he has to pay to the defendant must of necessity be proved to be available. It was further pointed out that right from the date of the execution of the agreement till the date of decree, the plaintiff must prove that he is ready and has always been willing to perform his part of the contract. In the case before us, we find that for some point of time, during pendency of the suit the plaintiff was not in a position to pay the balance amount and prayed before the defendant for extension of time. Thus, we have applied the principle laid down by the Supreme Court in the above case of N.P. Thirugnanam to the facts of the present case.
26. Moreover, in the case of Pramod Buildings and Developers Pvt. Ltd. [supra], relied upon by Mr. Shah, it has been specifically held that in a suit for specific performance of contract, burden lies on plaintiff to prove readiness and willingness to perform his obligations in terms of contract and if the plaintiff was not willing to pay the balance amount at the time of sale as agreed, he could not claim that he was ready and willing to perform his obligations. In the case before us, from the facts found by us from the materials on record, we have found that the plaintiff had failed to discharge the burden of proving the aforesaid fact. To the same effect, the Supreme Court in the case of Inderchand Jain [supra] held that the plaintiff should not only make necessary pleadings, but also establish that he had all along been ready and willing to perform his part of contract not only at the stage of filing of the plaint but also at the subsequent stages.
27. We, thus, find that the decisions on the aforesaid question relied upon by the learned counsel for the respondent justify our conclusion on the aforesaid aspect.
28. On the question whether time is to be treated as the essence of contract or not, our reasonings find support from the decision of the Supreme Court in the case of Swaranam Ramchandran[Smt] and another v. Aravacode Chakungal Jayapalan (supra), where it was held that in case of agreement for sale of immovable property, time should not be presumed to be the essence in case of conveyance of immovable property and it is the intention of the parties which is decisive factor for deciding such question.
29. In the case of N. Srinivasa v. Kuttukaran Machine Tools Limited, reported in [2009] Supreme Court Cases 182, it was held that even an express stipulation to the effect that the time would be the essence of contract could be rebutted by leading appropriate evidence. At this stage, we may also appropriately rely upon the decision of the Supreme Court in the case of Madhya Pradesh Housing Board v. Progressive Writers and Publishers, reported in [2009] 5 SCC 678, where it was held that the question whether the time is an essence of contract is a question of fact to be determined in each case by taking into account the overall agreement and mere expression of the stipulated time in the agreement would not make the time an essence of contract and the burden of proving the fact that the time was the essence is upon the person who takes such defence.
30. In the case before us, we have already held that the defendant failed to point out any circumstance or evidence indicating that in the facts of the present case, the time was the essence of contract. Since in this case, we have decided the aforesaid issue in favour of the appellant, we do not propose to deal with the other decisions cited by Mr. Desai on the aforesaid question.
31. On consideration of the entire materials on record, we thus hold that in this case, time was not the essence of contract and that the defendant, without performing his part of the contract, by disclosing to the plaintiff that he obtained the required Income tax clearance certificate for the purpose of selling the suit property, illegally terminated the agreement, although the said certificate was not obtained in his personal capacity. Thus, he had no right to confiscate the earnest money.
32. The result is that although the plaintiff is not entitled to get a decree of specific performance of contract, the defendant was also not entitled to confiscate the earnest money and, therefore, we affirm the decree passed by the learned trial Judge so far as the refusal of the relief of specific performance of contract is concerned, but modify the same by granting a decree for refund of earnest money of Rs.15, 51, 551. 51 paise with interest at the rate of 12% per annum from the date of payment of earnest money till recovery of the amount.
33. The appeal is accordingly partly allowed. In the facts and circumstances, there will be, however, no order as to costs.
[BHASKAR BHATTACHARYA, ACTING CJ.] [J.B.PARDIWALA, J.] mathew