IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD FRIDAY, THE TWENTY FOURTH DAY OF JANUARY TWO THOUSAND AND FOURTEEN PRESENT THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR APPEAL SUIT Nos.492 and 593 of 2003 AS.No.492 of 2003: BETWEEN Datla Satyavathi Devi.
…APPELLANT AND Smt. Rani Rao Bala Saraswathi Devi and others.
…RESPONDENTS Counsel for the Appellant: MR. E. KRISHNA MOHAN RAO MR. N. VIJAY Counsel for the Respondents: MR. ERANKI PHANI KUMAR AS.No.593 of 2003:
BETWEEN Smt. Rani Rao Bala Saraswathi Devi and others.
…APPELLANTS AND Datla Satyavathi Devi and another.
…RESPONDENTS Counsel for the Appellant: MR. ERANKI PHANI KUMAR Counsel for the Respondents: MR. E. KRISHNA MOHAN RAO MR. N. VIJAY The Court made the following: - COMMON JUDGMENT:
AS.No.492 of 2003 is filed by the plaintiff in O.S.No.28 of 2000 on the file of the Senior Civil Judge, Pithapuram. The said suit, seeking specific performance of the suit agreement, was dismissed so far as relief of specific performance is concerned but was decreed to the extent of alternate relief by directing refund of the advance paid under judgment and decree dated 30.10.2002. To the extent of grant of the said alternate relief, defendants 1 to 3 have filed A.S.No.593 of 2003, primarily, contending that the action of the defendants in forfeiting the advance was justified.
2. Since the main appeal, A.S.No.492 of 2003, would decide the other appeal also, the appellant herein is referred to as plaintiff and the respondents are referred to as defendants for the sake of convenience.
3. The plaint allegations in brief are that defendants 1 to 3 are owners of the suit schedule land admeasuring Ac.16.04 cents in Sy.No.85, Patta No.57 situated at Chendurthi village, Gollaprolu Mandal, East Godavari District. It is alleged that defendants 1 to 3 offered to sell and the plaintiff and the fourth defendant agreed to purchase the schedule land for a total consideration of Rs.1,50,000/-. Accordingly, an agreement of sale was entered into between the parties on 12.10.1995. However, the said agreement was lost in transit and hence, identical agreement was again executed by and between the parties on 14.10.1995, marked as Ex.A1. As per the terms of the said agreement, defendants 1 to 3 received a sum of Rs.1,00,000/- as advance and it was stipulated that within one year period the agreement holders would pay the balance of Rs.50,000/- and obtain registration of the sale deed in their name and in the name of their nominee(s). The agreement also provides that possession of the schedule property was delivered to the agreement holders.
The plaintiff, further, alleged that though the agreement recited as to delivery of possession, the same was never delivered. The plaintiff also claims that she was always ready with the balance consideration and in spite of demanding defendants 1 to 3 to execute the sale deed, defendants 1 to 3 failed to discharge their obligation. Alleging that the plaintiff was always ready at all relevant times, she filed the present suit for specific performance and in the alternative, sought refund of advance of Rs.1,00,000/-.
4. Defendants 1 to 3 filed a written statement accepting that there was an agreement of sale between the parties dated 12.10.1995 followed by duplicate agreement dated 14.10.1995, Ex.A1, signed by the parties at Secunderabad. They also accepted that advance of Rs.1,00,000/- was paid to them under the agreement and further stated that one year period or such mutually extended date was stipulated in the agreement for completion of the transaction.
Defendants 1 to 3, however, disputed the plaintiff’s claim that she was ever ready with the balance consideration and it was asserted that the plaintiff never made any demand either orally or in writing to any of the defendants to execute and register the sale deed within the stipulated time. They also disputed that the plaintiff was ready with the balance payment and on the contrary, as there was no positive response from the plaintiff; defendants 1 to 3 sent a legal notice, Ex.B2, dated 20.09.1997 to plaintiff as well as the fourth defendant canceling the suit agreement. It is, further, stated that the notice sent to plaintiff returned unserved, as per returned cover, Ex.B4, but the said notice was served on the fourth defendant vide Ex.B3, postal acknowledgement. Defendants 1 to 3, however, claimed that in spite of the said legal notice, the brother of the plaintiff was trying to sell the suit schedule property to third parties for which the defendants issued a paper publication i n Rajahmundry edition of Eenadu daily newspaper dated 30.01.1998 cautioning the public not to enter into such agreement. The said publication was marked as Ex.B5.
Defendants 1 to 3, therefore, contended that the plaintiff though aware of the cancellation of the suit agreement and forfeiture of advance amount, has suppressed the said fact and filed the present suit. Defendants 1 to 3, therefore, claimed that the plaintiff is not entitled to either main relief of specific performance or the alternate relief of refund.
5. On the basis of the aforesaid pleadings, the trial Court framed the following issues for consideration:
1. Whether time is the essence of contract between the plaintiff, D-4 on one side and defendants 1 to 3 on the other side?
2. Whether the agreement of sale is deemed to have been cancelled and earnest money is forfeited?
3. Whether the plaintiff is entitled for specific performance and refund of earnest money of Rs.1,00,000/-?
4. To what relief?
6. Plaintiff examined herself as P.W.1 and marked Exs.A1 to A3. The second defendant was examined as D.W.1 and he marked Exs.B1 to B5.
7. On consideration of the oral and documentary evidence, the trial Court came to the conclusion that there was no evidence on the part of the plaintiff making any oral demand, as claimed in the plaint, calling upon defendants 1 to 3 to perform their part of the contract.
The trial Court also found that out of the joint agreement by plaintiff and the fourth defendant, only the plaintiff filed a suit for specific performance and the fourth defendant was not even examined, though notice of cancellation of agreement was served on the fourth defendant. Thus, while denying the relief of specific performance to the plaintiff, the trial Court, however, granted the alternate relief with regard to refund of the advance amount with interest at 12% per annum on Rs.1,00,000/- from the date of suit till the date of decree and thereafter, at 6% per annum. Hence, the present appeals are filed by both the parties.
8. Heard Mr. N. Vijay, learned counsel for the appellant/plaintiff in A.S.No.492 of 2003 and Mr. Eranki Phani Kumar, learned counsel for the respondents/defendants in A.S.No.492 of 2003 and also appellants in A.S.No.593 of 2003.
9. Mr. N. Vijay, learned counsel for the appellant/plaintiff, primarily, contended that the plaintiff had, admittedly, paid more than 2/3rd of the consideration on the date of suit agreement itself and as such, the approach adopted by the trial Court in denying the relief of specific performance was clearly erroneous. Learned counsel also points out that though the suit agreement, Ex.A1, recites with regard to delivery of possession, admittedly, the possession remained with defendants 1 to 3. Learned counsel also placed strong reliance upon the case of the plaintiff that though on the date of agreement she was residing at Secunderabad, she shifted to Kakinada and did not receive the notice sent by the defendants, Ex.B2, which was sent on the Secunderabad address. Learned counsel, therefore, states that there is nothing like suppression of any fact by the plaintiff, as wrongly understood by the trial Court. Learned counsel, therefore, submits that having paid 2/3rd of the sale consideration there is no reason why the plaintiff would not pay the balance 1/3rd.
10. So far as the maintainability of the suit with respect to one of the co- agreement holders is concerned, learned counsel placed reliance upon Section 15 of the Specific Relief Act and also on a decision of the Nagpur High Court in JAGDEO SINGH v. BISHAMBHAR[1]. In the said decision, while interpreting Section 23 of the Specific Relief Act, it was held that where one or more co-contractors want to enforce the specific performance, they can do so and it is not necessary, therefore, that all co-contractors should be arranged on the same side for obtaining specific performance.
Learned counsel, therefore, submits that the fourth defendant, who was unable to join with the plaintiff, was added as defendant No.4 and as such, the plaintiff’s claim for specific performance was perfectly maintainable.
11. Learned counsel has also placed reliance upon a decision of the
[2]
Supreme Court in MOTILAL JAIN v. RAMDASI DEVI wherein the Supreme Court held that readiness and willingness of the plaintiff has to be gathered from the circumstances. Learned counsel submits that when the plaintiff had paid 2/3rd of the consideration, there was no reason to doubt plaintiff’s ability to pay the balance 1/3rd of the consideration. Another decision of the Supreme Court in NARENDERJIT SINGH v. NORTH STAR
[3]
ESTATE PROMOTEERS LIMITED is also relied upon in support of the proposition that readiness and willingness is to be decided with reference to conduct of parties, attending circumstances and the evidence on record and mere escalation of price is no ground to deny specific relief. Another decision of the Supreme Court in SARADAMANI KANDAPPAN v.
[4]
S. RAJALAKSHMI is also relied upon to point out the ratio in
K.S. VIDYANADAM v. VAIRAVAN [(1997) 3 SCC 1], as culled out in para 43 of the judgment, which is extracted herein for the sake of convenience.
“43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam;
(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was “ready and willing” to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also “frown” upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.”
Based on the above paragraph, learned counsel submits that equity, in fact, shifts in favour of the purchaser, who has paid the major part of the consideration.
12. Mr. E. Phani Kumar, learned counsel for the respondents/defendants, on the other hand, submits that the suit is clearly barred by limitation, as the original suit agreement is dated 12.10.1995 and one year period for completion of the transaction would end by 11.10.1996 and the suit had to be filed within three years as provided under Article 58 of the Limitation Act. Thus, the preset suit, having been filed on 13.10.1999 is claimed to be barred by time. Learned counsel placed reliance upon clause 3 of the said agreement, which makes one year period, as the essence of the contract, within which the transaction has to be completed.
Learned counsel submits that while there is total absence of any evidence, oral and documentary on the part of the plaintiff, the defendants, in fact, had waited sufficiently and then issued Ex.B2 notice to both the agreement holders pointing out that they have failed to perform their part of the contract within the stipulated period and therefore, the agreement was cancelled and advance was forfeited. The said notice, Ex.B2, dated 20.09.1997 issued by the defendants, long after expiry of one year period fixed under the agreement, was, admittedly, served on co- agreement holder, fourth defendant and knowledge to the plaintiff is required to be presumed. Learned counsel also supports the knowledge to the plaintiff by virtue of Ex.B5 paper publication made in Eenadu daily newspaper, Rajahmundry edition, by the defendants and points out that in spite of the same further two years expired before the plaintiff filed the present suit.
13. It may also be mentioned that pending A.S.No.492 of 2003, defendants 1 to 3 have sold the suit schedule property to respondent No.5 herein, who is impleaded as such in A.S.No.492 of 2003.
14. Learned counsel for the respondents/defendants also points out that the plaint allegation stating that the plaintiff made several demands on the defendants is without any dates and details and as such cannot accepted. Learned counsel also points out further circumstance that the plaintiff obtained gift from her father-in-law under registered Gift Deed, Ex.B1, dated 04.06.1999 relating to a property in Hyderabad and the address, in the said document, shows that the plaintiff as resident of Habsiguda, Secunderabad, which demolishes her claim that she had shifted over to Kakinada. Learned counsel points out that the notice of cancellation, Ex.B2, was sent to the plaintiff also at the said Habsiguda address and as such, it is improbable that the plaintiff did not receive the said notice, but, apparently, she managed to returned it. All these circumstances, according to the learned counsel, fully justify the decision of the trial Court in denying the relief of specific performance in view of the conduct of the plaintiff.
15. Learned counsel also placed reliance upon a decision of this Court in CHUNDURU PADMAVATHI v. CHUNDURU NARASIMHA RAO[5] wherein this Court denied the relief of specific performance in view of the delay in filing the suit coupled with the substantial increase in prices of properties. The decision of the Supreme Court in K.S VIDYANADAM v. VAIRAVAN[6] is also relied upon, a reference to which is already made in the paragraphs above. Learned counsel, therefore, submits that the plaintiff is required to aver and prove continuous readiness and willingness and in the absence thereof, her claim for specific performance is bound to fail. Learned counsel also points out that the plaintiff has not pleaded any special hardship on account of denial of such relief. To the extent of his appeal, A.S.No.593 of 2003, learned counsel points out that the trial Court ought not to have decreed the alternate relief of refund of amount, as the plaintiff is to be blamed for the delay of four years in approaching the Court, though one year time was specified for completion of the transaction. Learned counsel, therefore, submits that the forfeiture of advance amount by defendants 1 to 3 was fully justified on the facts and out not to have been interfered with by the trial Court.
16. On the above rival contentions, the following points emerge for consideration:
1. Whether the plaintiff has pleaded and proved her readiness and willingness, as required under Section 16(c) of the Specific Relief Act and whether the trial Court was justified in denying such relief to the plaintiff?
2. Whether defendants 1 to 3 were justified in forfeiting the advance amount paid by the plaintiff under agreement Ex.A2?
POINT No.1:
17. The original agreement of sale between the parties was, admittedly, on 12.10.1995 and the said original document having been lost in transit, Ex.A2, duplicate agreement dated 14.10.1995 was executed by and between the parties reiterating the same terms and conditions, as in the original agreement. In a strict sense, however, Ex.A2 is not a duplicate of the original agreement, though styled as such. However, the terms and conditions of Ex.A2 are not in controversy and as per clause 3 thereof, one year period was specified for completion of transaction unless the parties mutually extend the said time. Admittedly, there is no such extension pleaded and as such, the contract had to be concluded within one year i.e. 13.10.1996.
The agreement, further, provides that possession of the property is delivered to the purchaser but, admittedly, possession remained with defendants 1 to 3. It is also not in controversy that defendants 1 to 3 received advance of Rs.1,00,000/- out of total consideration of Rs.1,50,000/-. The suit, however, came to be filed on 13.10.1999 and the three years period under Article 58 of the Limitation Act, which commenced after expiry of one year of suit agreement, would end by 13.10.1999. Thus, the suit was filed on the last day of limitation.
18. Though Mr. E. Phani Kumar, learned counsel for defendants, contended that the suit is bared by limitation, the legal notice, Ex.B2, issued on behalf of defendants 1 to 3 itself states that time of one year for completion of transaction was available up to 14.10.1996 (though it is typed in Ex.B2 as 14.10.1995). The plaint, having been filed on 13.10.1999, is, therefore, on the last day of three years limitation. Apparently, for this reason no such claim as to limitation was raised before the trial Court.
19. Section 16(c) of the Specific Relief Act, provides as follows: “16. Personal bars to relief:-
Specific performance of a contract cannot be enforced in favour of a person – (a) … (b) … (c) who fails to aver and prove that he has 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 terms the performance of which has been prevented or waived by the defendant.
Explanation: - For the purposes of clause (c), -
(i) where a contract involves 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;
(ii) the plaintiff must ever performance of, or readiness and willingness to perform, the contract according to its true construction.”
20. The legal position in this regard is already reiterated by the Supreme Court in NARENDERJIT SINGH’s case (3 supra) and SARADAMANI KANDAPPAN’s case (4 supra). It is also settled by the aforesaid decisions that readiness and willingness is not to be judged in a straight jacket formula and has to be judged from the overall circumstances and conduct of the parties.
21. If we examine the evidence on record from that stand point there is hardly any evidence on behalf of the plaintiff in support of her claim that any demands were made by the plaintiff on the defendants within the stipulated period to execute and register the sale deed by receiving the balance amount. Plaintiff, as P.W.1, admits in cross-examination that she stayed in Hyderabad up to May 1997 i.e. almost two years after the suit agreement. However, no oral or written demands made by her were established. In the plaint also, there are no particulars of any steps taken by the plaintiff within the said one year period or immediately thereafter. Defendant No.4, co-agreement holder along with the plaintiff, has not contested the suit nor supported the plaintiff by deposing in support of the plaintiff.
It is significant that the fourth defendant has received the notice, canceling the agreement, sent by defendants 1 to 3 under Ex.B2 vide his acknowledgement Ex.B3. He, however, has not contraverted the claim of the defendants in the said legal notice in any manner whatsoever. In the cross- examination of the plaintiff, as P.W.1, she stated as follows:
“… While I was staying in Hyderabad, there were talking terms between me and D.4. Myself and D.4 used to go to the defendants together and we also go individually to demand them, (witness adds D.4 entrusted the work of demanding the defendants 1 to 3 to me). He did not give it in writing. I did not get it mentioned in the plaint that the defendants 1 to 3 were used to be absent for some times and for some times they used to say that they would get the land measured, deliver the same and execute a sale deed … I have not filed any document that I was ready with the balance of sale consideration, (witness adds that I was ready with the balance sale consideration). Neither myself nor D.4 got issued legal notice to D.1 to D.3 mentioning the facts, that they were postponing the registration of sale deed. I did not contract D.4 since, he was not available in phone. Since, D.1 to D.3 have been postponing the registration from time to time I did not get issue a legal notice and that is the only reason for non-issue of legal notice. I demanded the defendants 1 to 3 twice or thrice in 1998. I waited till filing of the suit, but defendants did not come forward. I telephoned to the defendants from Hyderabad by going there.”
22. In support of plaintiff’s claim that she shifted to Kakinada after May 1997, she relied upon Exs.A2 and A3, xerox copy of ration card and gas supply entry. However, she could not explain as to why her address is described as R/o. Habsiguda, Secunderabad under EX.B1, Gift Deed. Even otherwise assuming that the plaintiff had shifted over to Kakinada, it does not amount to any disability for the plaintiff to make a demand on the defendants to specifically perform the contract by offering balance consideration. No such averment or evidence is forthcoming on behalf of the plaintiff. Merely because the plaintiff had paid 2/3rd of the consideration, it cannot be said that the rigour of establishing the ingredients of Section 16(c) of the Specific Relief Act is anyway diluted on the facts of the present case. The decision in K.S VIDYANADAM’s case (6 supra) was a case relating to urban properties where the escalation of prices is usually manifold over passage of time. In the present case, we are concerned with agricultural properties and hence, the ratio of the aforesaid decision, in terms and on facts, may not directly apply to the facts of the present case. But nevertheless the lapse of time of almost four years in filing the suit from the date of agreement coupled with the fact that there is no evidence of any demand made by the plaintiff by offering payment of balance amount and demanding execution and registration of the sale deed has to be held against the plaintiff. The trial Court, therefore, was right in refusing to exercise discretion in favour of the plaintiff.
Point No.1 is, therefore, answered against the appellant/plaintiff.
POINT No.2:
23. Forfeiture of advance amount by defendants 1 to 3 is sought to be justified by them on the ground that they had entered into the suit transaction with a view to purchase a property at Secunderabad and on account of the inordinate delay caused by the plaintiff, the very purpose of the transaction of sale of the suit land was frustrated.
24. While it may be that the suit transaction was entered into for the said purpose, the fact, however, remains that Ex.A2, agreement, does not provide for forfeiture. If the parties were so keen on completion of transaction within the time prescribed, nothing prevented the parties from providing for forfeiture of the advance, if the agreement holder fails to complete the transaction.
Defendants 1 to 3 could not have unilaterally forfeited the advance amount, as rightly pointed out by the learned counsel for the plaintiff. The forfeiture is in the nature of a penalty, which was not provided for in the contract between the parties. The decree of the trial Court directing refund of the said advance amount by granting alternate relief is, therefore, justified.
25. The impugned judgment and decree, however, directs refund of the said amount with interest at 12% per annum pendente lite but it is significant to notice that the plaintiff did not claim interest at the aforesaid rate. The trial Court also has not substantiated as to why interest at 12% is decreed pendente lite. Since the said rate of interest from the date of suit till date of decree appears excessive, the same is required to be scaled down to 6%.
Point No.2 is accordingly answered.
In the result, A.S.No.492 of 2003 is dismissed and A.S.No.593 of 2003 is, however, allowed to the extent of modifying the decree for refund of advance by directing that defendants 1 to 3 shall pay to the plaintiff a sum of Rs.1,00,000/- with interest at 6% per annum throughout i.e. from the date of suit i.e. 13.10.1999 till realization.
As a sequel, the miscellaneous applications, if any, shall stand dismissed as infructuous. Both parties shall bear their own costs.
VILAS V. AFZULPURKR, J January 24, 2014 DSK
[1] AIR 1937 NAGPUR 186
[2] (2000) 6 SCC 420
[3] (2012) 5 SCC 712
[4] (2011) 12 SCC 18
[5] 2000 (2) ALD 106
[6] AIR 1997 SC 1751