R.Rajaram vs T.R.Maheswaran :

Introduction :-

Whether a plaintiff who failed to deposit the balance sale consideration for a period of four years after obtaining lodgment schedule from the trial Court to deposit the amount, which was a pre-condition for instituting a suit for specific performance as per the Agreement entered into between the parties, and made the trial Court to believe that such deposit was in fact made, can be said to be a person who was always ready and willing to perform his part of the contract and entitled for an equitable remedy of specific performance, is the core question to be decided in this first appeal.

2. Challenge in this first appeal is to the Judgment and Decree dated 05 April, 1995 in O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam, whereby and whereunder a Decree for specific performance was granted in favour of the respondent/ plaintiff.

3. The parties to this appeal are hereinafter referred to as plaintiff and Defendants as per their status before the trial Court.

Background facts :-

The Plaint :-

4. The suit in O.S.No.116/1991 was instituted by the plaintiff against the Defendants praying for a Decree of specific performance on the basis of the sale Agreement dated 29 June 1990 or in the alternative, directing the Defendants to refund the advance consideration of Rs.1,60,000/- with interest @ 18% termed as damages.

5. In the plaint in O.S.No.116/1991, plaintiff has inter-alia contended thus:-

(a) The property described in the schedule to the plaint absolutely belongs to the defendants. They have decided to sell the property to raise funds for their business. The plaintiff was ready and willing to purchase the property and accordingly, after negotiation, defendants offered to sell the property for a sum of Rs.1,75,000/-. The said offer was accepted by the plaintiff and an agreement was entered into on 29 June 1990. As per the said agreement, the plaintiff agreed to purchase the suit property for a total consideration of Rs.1,75,000/- and a sum of Rs.1,50,000/- was paid as advance, the receipt of which was duly acknowledged by the defendants. As per the terms and conditions of the agreement, the balance amount of Rs.25,000/- has to be paid within one year and the plaintiff has to get the document executed. It was further stipulated that in case the plaintiff fail to pay the balance sale consideration and get the conveyance executed and registered within one year from the date of agreement, plaintiff would lose the advance and in case of failure on the part of the defendants to perform their part of the contract, the plaintiff is at liberty to sue the defendants for specific performance of the agreement after depositing the balance sale consideration and get the conveyance executed and recover possession of the suit property through Court.

(b) Since the defendants were hard pressed for money, a further sum of Rs.10,000/- was paid on 15 July 1990 and in token of acceptance of the said amount, the defendants also issued a receipt cum acknowledgment dated 15 July 1990. In the said receipt also, they have reiterated the terms and conditions of sale. According to the plaintiff, he was ready and willing to perform his part of the contract at all point of time. He was having sufficient funds to pay the balance sale consideration of Rs.15,000/-. Though repeated requests were made to the defendants to receive the balance consideration and to execute the deed of conveyance, they were not prepared for the same. Therefore, plaintiff was constrained to issue notice to the defendants through his lawyer on 05.04.1991. The said notice was returned unserved which made the plaintiff to send a telegram on 26.04.1991 calling upon the defendants to execute the sale deed after receiving the balance sale consideration. Though the telegram was received by the defendants, there was no follow up action to register the sale deed. The plaintiff was ready and willing to pay the balance consideration of Rs.15,000/- and to show the bona fides, lodgment schedule was also filed along with the plaint for depositing the balance consideration in Civil Court deposit. Accordingly, the suit was instituted for specific performance.

(c) Plaintiff has claimed an alternative relief of damages, as according to him, he would have earned at least 18% from the date of payment, if he had invested the said amount in any approved financial institution and in the event of the Court coming to a conclusion that he was not entitled to a decree of specific performance, he should be given a decree to refund the advance consideration with interest at the rate of 18% which was termed as damages.

The written statement :-

6. Defendants on appearance before the trial Court filed their Written Statement. The material contentions as found in the Written Statement would read thus :-

a) It is true that an Agreement was entered into between the parties to sell the suit property for a sum of Rs.1,75,000/-. However, the plaintiff was not in a position to obtain the Sale Deed from the Defendants by paying the balance sale consideration within the time stipulated in the Agreement. It was only on account of the failure on the part of the plaintiff to pay the balance amount, the Sale Deed was not executed. Since the default was on the part of the plaintiff, Defendants have not contributed for the delay, and as such, plaintiff is not entitled for a Decree of Specific Performance. It was further contended that they have not received the notice from the plaintiff. Since the plaintiff has committed breach of contract, he is not entitled to get any kind of relief from the Court and accordingly, the Defendants prayed for dismissal of the suit.

The Issues :-

7. In accordance with the pleadings, the trial Court framed the following issues for consideration :-

"1. Is it the plaintiff or the defendants who had violated the conditions in the sale agreement ?

2. Are the defendants liable to execute the sale deed after accepting the sale consideration ?

3. Are the defendants liable to repay Rs.1,60,000/- with interest at 12% to the plaintiff, as damages ?

4. To what relief, the plaintiff is entitled to ?"

Proceeding before Trial Court :-

8. Before the trial Court, plaintiff was examined as PW-1. Witness to the Agreement was examined as PW-2. Exs.A-1 to A-6 were marked on the side of the plaintiff. The first defendant was examined as DW-1 and they have also examined DW-2 to prove the value of the suit property as on the date of the Agreement as well as its present rate. However, no exhibits were marked on the side of the Defendants.

Judgment of the Judge :-

9. Though specific performance is a discretionary remedy, and the plaintiff was bound to prove that he was ready and willing to perform his part of the contract at all point of time, no specific issue to that effect was framed by the trial Court.

10. The learned Trial Judge recorded the submissions made by the counsel for the plaintiff and the Defendants. After recording the submissions advanced on the side of the plaintiff, the Court observed that the submission of the counsel has to be accepted. However, there was no independent assessment made by the learned Trial Judge with respect to the pleadings as well as evidence adduced on the side of the parties to come to a definite conclusion that the plaintiff was entitled to a Decree of Specific Performance.

11. The learned Trial Judge by agreeing with the contentions raised on the side of the plaintiff, observed that the Defendants could have given a reply to the telegram and the fact the Defendants have not taken any steps to execute the documents proved that there was no merit in their contention that non availability of the balance consideration with the plaintiff was the reason for the failure to execute the document.

12. The counsel for the plaintiff also argued before the trial Court that as per the sale agreement marked as Ex.A-1, in case the Defendants failed to register the document, the plaintiff was permitted to deposit the balance consideration before the trial Court and seek a Decree of Specific Performance. According to the learned Counsel, the plaintiff has taken steps to deposit the amount before the trial Court. The Trial Court accepted the said contention and indicated that deposit of the amount after taking a challan from court shows the bonafides of the plaintiff. The learned Judge by accepting the contention of the counsel for the plaintiff again made an observation that in view of Ex.A-3 and A-6 being notice and telegram respectively, it cannot be said that the plaintiff was not having the resources to pay the balance consideration and accordingly, the contention raised by the counsel for the Defendants to that effect was negatived. The Court ultimately observed that as per the evidence of PW-1 and PW-2, and in the light of documents, Exs.A-1 to A-6, as well as the admission made by PW-1 during his cross examination, it could be concluded that the plaintiff was entitled to a Decree for Specific Performance. Accordingly, the suit was Decreed as prayed for and the Defendants were directed to execute the Sale Deed after receiving the balance sale consideration. Since the main prayer was granted, prayer for granting alternative relief was dismissed. The Trial Court also granted thirty days time to the plaintiff to deposit the balance sale consideration. In short, the plaintiff was granted the equitable remedy of Specific Performance. It is the said Judgment and Decree which is impugned in the appeal at the instance of the Defendants.

Submissions :-

13. The learned Counsel for the Defendants attacked the Judgment and Decree of the trial Court on the following grounds :-

"a) Plaintiff was not ready and willing to perform his part of the contract. This was proved by the conduct of the plaintiff. There was no documents produced before the trial Court to substantiate the contention that he was having sufficient funds to complete the transaction by tendering the balance consideration.

b) The plaintiff has claimed damages in the plaint itself. Therefore, it was evident that he was more in favour of getting an alternative remedy of damages than a decree for specific performance, and in such circumstances, he is not entitled to the discretionary remedy of Specific Performance.

c) The Agreement was entered into in the year 1990. The property is situated in a prime locality at Tindivanam and land value has gone up considerably during the interregnum and as such, specific performance of the contract would give the plaintiff an unfair advantage over the defendants.

14. The learned Counsel for the plaintiff supported the Judgment and Decree of the trial Court. He also contended that major portion of the consideration was already paid and as such, it cannot be said that the plaintiff was not having sufficient money with him for payment of the balance consideration. Similarly, the suit was also filed even before the expiry of the time granted in Ex.A-1 and as such, it cannot be said that there was undue delay in approaching the Court.

The core issues in this appeal :-

15. The following points arise for consideration in the present appeal :-

a) Whether the plaintiff was ready and willing to perform his part of the contract at all point of time?

b) Whether the plaintiff is entitled to the discretionary remedy of Specific Performance in the facts and circumstances of this case ?

c) whether the plaintiff is entitled to the alternative remedy of refund of the advance consideration with interest ?

Discussion :-

16. The execution of the agreement dated 26.09.1990 as per Ex.A-1 is not in dispute. Similarly, the subsequent payment of Rs.10,000/- on 15.07.1990 and the execution of the document in Ex.A-2 is also admitted.

17. The plaintiff has agreed to purchase the suit property on a total consideration of Rs.1,75,000/-. Terms and conditions of the agreement was reduced into writing. The said document was marked as Ex.A-1.

18. As per Ex.A-1, plaintiff was bound to pay the balance consideration of Rs.25,000/- within one year and to get the sale deed executed. It was also stipulated that in case plaintiff failed to pay the balance consideration and get the sale deed executed in his favour, he would lose the advance consideration. Similarly, in the event of the failure of defendants to execute the sale deed in spite of tendering the balance consideration by the plaintiff, liberty was granted to the plaintiff to deposit the balance consideration in Court and to file a suit for specific performance. Since the defendants were in dire need of money, a further sum of Rs.10,000/- was paid by the plaintiff on 15.07.1990. Plaintiff has also obtained a further agreement on 15.07.1990 as per Ex.A-2 acknowledging the subsequent payment. In Ex.A-2, the terms and conditions of the sale was reiterated. It was also stated that plaintiff has to produce the stamp papers and tender the balance sale consideration of Rs.15,000/- within the time stipulated in Ex.A-1 and in such an event, the document has to be registered by the defendants. There was a further stipulation in Ex.A-2 which was a reproduction of the conditions as found in Ex.A-1. As per the said condition, in case the defendants failed to register the document in spite of the readiness on the part of the plaintiff to pay the balance sale consideration, plaintiff was given the right to deposit the balance sale consideration before the Court and to file a suit for specific performance.

19. Though the balance sale consideration was only a sum of Rs.15,000/-, and the defendants were in dire need of money, which was indicated in Ex.A-2 as well as in the plaint, no steps appears to have been taken by the plaintiff to pay the balance sale consideration immediately and to get the sale deed executed. It was only during the fag end of the time fixed for completion of the transaction, plaintiff has sent the notice in Ex.A-3 dated 05 April 1991 followed by telegram as per Ex.A-6 dated 26 April 1991. According to the plaintiff, the telegram was received by the defendants, and even then, they have not taken any action to conclude the sale. However, very strangely, the suit was filed two months after the telegram and that too, just two days prior to the expiry of the time prescribed in Ex.A-1 to conclude the transaction.

20. Before the trial Court, plaintiff was examined as PW-1 and during his evidence, he deposed that he was a licensed pawn broker doing business at Tindivanam. He was also maintaining accounts of the business transactions. It was the further evidence of PW-1 that he was having documents to prove his financial capacity to raise the sale consideration of Rs.1,75,000/- and as such, it cannot be said that he was not having sufficient money for the purpose of payment of balance sale consideration.

21. The first defendant in his evidence as D.W.1 specifically stated that the plaintiff never approached him or the second defendant to complete the transaction with the balance amount. D.W.1 maintained that it was only the plaintiff who was at fault. D.W.1 expressly denied the contention raised on the side of the plaintiff that he was doing finance business. According to D.W.1, plaintiff has no property much less house property in Pondicherry or in Tindivanam. He was not doing finance business. In short, the contention raised by the plaintiff with regard to his sound financial position was challenged by the defendants.

22. Before the trial Court, it was the contention of the plaintiff that he was having sufficient funds with him to pay the balance consideration and to get the sale deed executed. He also contended that in spite of sending a notice as well as telegram to the defendants, they have not turned up to register the document. The plaintiff attempted to project his bona fides by contending that the application for lodgment schedule to deposit the balance sale consideration has already been filed in the Court which shows that he has performed his part. The learned Trial Judge without making any attempt to find out the bona fides in the contention, simply agreed with the views expressed by the learned counsel for the plaintiff; and by way of a passing remark, observed that the learned counsel for the plaintiff was perfectly correct in his submission that it was only the defendants who were not ready and willing to perform their part of the contract, which was also substantiated by the fact that they have not taken any steps to register the property even after receipt of notice as well as telegram.

23. Since the trial Court has not framed any issues with respect to the entitlement of the plaintiff to obtain a decree of specific performance as well as his readiness and willingness at all point of time, the said vital issue has to be considered in the first appeal.

24. The agreement in Ex.A-1 was executed on 29.06.1990. Plaintiff paid a sum of Rs.1,50,000/- as advance. The time limit for completion of the transaction was specifically mentioned in Ex.A-1. The defendants were in dire need of money and as such, a further sum of Rs.10,000/- was paid on 15.07.1990 and a receipt cum agreement was entered into on 15.07.1990, as per Ex.A-2. In the said document, there was a mention that the defendants were hard pressed for money. When the defendants were eager to get the balance sale consideration, nothing prevented the plaintiff to pay the balance and to get the sale deed executed immediately. Therefore, it is evident that the prescription of one year as the time for completion of the transaction was made only at the instance of the plaintiff. In case he was having the entire sale consideration with him and as the defendants were in dire need of money, he could have paid the balance sale consideration also and there was no need to wait for the stipulated period of one year to complete the transaction. In Ex.A-2 as well as in the plaint, there was a specific statement about the financial difficulties faced by the defendants. Plaint also proceeds on the factual basis that it was only to raise funds for the business, defendants have agreed to sell the property. When it was their urgent necessity to raise funds for their business, the defendants would be eager to complete the transaction at the earliest point of time. There was no necessity so far as the defendants were concerned to fix such a longer time for completion of the transaction. It was also not the contention of the plaintiff that the defendants were not having the title deeds with them for the purpose of executing the sale deed and that was the reason for fixing a longer time for completion of the transaction in spite of the fact that major portion of the sale amount has already been paid. Therefore, the only possible conclusion that could be arrived at from the given facts is that the period of one year was prescribed only at the instance of the plaintiff as he has to arrange the balance sale consideration.

25. The subsequent payment of Rs.10,000/- was made as early as on 15.07.1990 and that too within a short time from the date of execution of Ex.A-1. This shows the imminent need of the defendants for money. Even after paying a sum of Rs.1,60,000/- plaintiff has waited till 05.04.1991 to send the notice in Ex.A-3 calling upon the defendants to receive the balance sale consideration and to execute the sale deed. Even after issuing notice followed by telegram and knowing perfectly well that the defendants were not coming forward to register the document, plaintiff has waited for about two months to file the suit. In fact, the suit was filed just two days prior to the expiry of the time limit.

26. In Ex.A-2, there was a specific recital that the plaintiff has to purchase stamp papers for the purpose of executing the document. However, other than sending notice in Ex.A-3 and telegram in Ex.A-6, there was nothing to show that the plaintiff has taken active steps for concluding the sale.

27. Plaintiff has stated in paragraph 5 of the plaint that he was always ready and willing to perform his part of the contract. The fact that he has applied for issuance of challan along with the plaint was also taken as a ground to prove his bona fides. However, even after obtaining a challan from the Court, he has not deposited the money. In fact, deposit of the balance sale consideration in court was agreed to be a pre-condition for instituting a suit for specific performance. The application for issuance of challan was only to comply with the said mandatory condition. The non deposit of the amount even after the order passed by the court shows the falsity of the case of readiness and willingness, as pleaded by the plaintiff. Therefore, it is evident that he was not possessed of the balance consideration.

28. The defendants had in clear terms challenged the financial capacity of the plaintiff to pay the balance sale consideration. According to them, plaintiff was not having the sufficient means, which alone was the reason for delay. Though in his evidence PW-1 stated that he was having substantial property as well as money and that his accounts would show that substantial amount was with him, not even a scrap of paper was produced before the Court to prove the contention. It cannot be said that the plaintiff should be having cash with him at all point of time. However, when there was a serious dispute raised by the defendants about the financial position of the plaintiff in the light of the period prescribed in the agreement to complete the transaction, plaintiff should have produced sufficient materials before the Court to substantiate his contention that he was always ready and willing to perform his part of the contract.

29. Time agreed between the parties to perform the contract expired by 29.06.1991. The suit was instituted on 27.06.1991 and on the very same day, plaintiff obtained a challan for deposit of a sum of Rs.15,000/-, being the balance sale consideration. However, no deposit was made. The amount was deposited on 07.04.1995 by way of demand draft dated 06.04.1995. The deposit made on 07.04.1995 before the Court cannot be considered to be a valid deposit made during the currency of the agreement and in pursuance of the agreement, and on the basis of the challan submitted on 27.06.1991. The deposit made by way of demand draft dated 06.04.1995 was clearly out of time. The deposit made subsequent to the decree does not satisfy the condition of pre-deposit of the balance amount before filing the suit for specific performance.

30. Plaintiff who approached the Court with a pair of unclean hands was not entitled for an equitable remedy. Plaintiff projected his case that he was always ready and willing to comply with the terms and conditions of the sale agreement. He also contended that he has applied for challan to deposit the balance sale consideration. During his evidence as PW-1, it was further stated on oath that he has applied for challan. The learned counsel for the plaintiff has also made his submission before the trial Court that the plaintiff was ready and willing at all point of time, which was borne out by the fact that he has obtained lodgment schedule to deposit the amount by way of challan. The trial Court also proceeded on the basis that the plaintiff was always ready and willing, which was substantiated by the fact that he has obtained a lodgment schedule. However, the fact remains that plaintiff has not deposited the amount though he has taken the challan. Therefore, there was a deliberate attempt on the part of the plaintiff to mislead the Court.

Discretionary remedy of specific performance :-

31. Remedy of specific performance is an equitable remedy. In Order to obtain such discretionary relief, plaintiff has to come to the Court with clean hands. Entire facts of the case have to be pleaded. There should be no attempt on the part of the plaintiff to conceal the facts. As a condition precedent for obtaining a decree of specific performance, the plaintiff should comply with all the mandatory conditions as incorporated in the sale agreement. When the sale agreement stipulates a pre-condition so as to enable the plaintiff to obtain a decree of specific performance, the said condition has to be complied with in its letter and spirit. There should be no attempt on the part of the plaintiff to mislead the Court. Whether it be favourable or unfavourable, plaintiff was expected to disclose the entire details of the transaction. The conduct of the plaintiff should be trustworthy. The course of conduct adopted by the plaintiff should be fair and any suppression of material particulars would be treated as unfair, which would dis-entitle him from obtaining the equitable remedy of specific performance.

32. Readiness and willingness on the part of the plaintiff to perform his part of the contract has to be ascertained from the totality of circumstances. Mere reproduction of the wordings in Section 16(c) of the Specific Relief Act is not enough. It is true that the plaintiff was not expected to maintain liquid cash with him through out the agreement period to discharge the obligation cast on him as per the agreement of sale. However, in cases wherein the very financial capacity of the plaintiff to pay the balance sale consideration was under challenge, he was expected to produce some materials to show his financial position and the availability of funds to honour the commitments made in the agreement of sale.

33. Since the remedy of specific performance is a discretionary remedy on equitable grounds, plaintiff has to produce materials with respect to his readiness and willingness at all point of time. The conduct of the plaintiff assumes significance in a case like this. Court was expected to weigh the materials produced by the plaintiff to come to a definite conclusion pertaining to the readiness and willingness to perform the contractual obligation voluntarily undertaken by the plaintiff. Any action on the part of the plaintiff to take undue advantage of the situation would give negative results and he would be denied the equitable remedy. The conduct of the plaintiff throughout should be taken note of to decide the issue regarding exercise of discretionary jurisdiction. In a matter relating to sale of property, Court was not bound to grant specific performance for a mere asking.

34. When the agreement entered into between the parties contains a specified mechanism to redress their grievances, and conditions to be complied with for exercising the said jurisdiction, it was absolutely necessary to adhere to those conditions.

35. Agreement involved in this matter pertains to the sale of immovable property. The terms and conditions were negotiated between the parties and an agreement was arrived at after consensus. As per the agreed terms, plaintiff would forfeit the advance amount in case the balance amount was not tendered and get the document registered after producing the necessary stamp papers. Similarly, situation which would emerge on account of the failure of the vendor to register the document was also foreseen by the parties. Accordingly, a condition regarding deposit of balance consideration and filing a suit for specific performance was incorporated in the agreement.

36. It is true that in ordinary circumstances payment of the balance sale consideration was not a pre condition for filing a suit for specific performance. However, in cases like the present one, when such a condition was incorporated at the instance of both the parties, such conditions would be binding on the parties. The Court is bound to examine such mandatory conditions when it has to decide as to whether the purchaser should be given equitable relief of specific performance. The conditions regarding payment of balance sale consideration for initiating action for specific performance was incorporated only to ensure that the plaintiff was having the balance amount with him and it was not an offer in paper to pay the balance sale consideration. In fact, the very cause of action for filing a suit for specific performance would arise only on account of the failure of the vendor to register the document in spite of tendering the balance amount and preparing the document in stamp papers. Therefore, the deposit of balance sale consideration was an essential term of contract. The plaintiff was well aware of the importance of the said condition and it was only on account of the said reason he has made an averment in the plaint that he has applied for lodgment schedule to deposit the balance sale consideration in Court. In fact, he has also applied for issuance of a lodgment schedule and the Court was pleased to issue chalan on 27.06.1991 itself so as to enable the plaintiff to deposit the balance sale consideration. However, there was no follow up action on the part of the plaintiff to deposit the amount. The amount was deposited only on 07.04.1995 and that too in pursuance of the direction as contained in the Judgment and Decree dated 05.04.1995. In fact, the factum of preferring an application for issuance of lodgment schedule was taken as a pointer to show the bona fides of the plaintiff. Thrust of the argument of the learned counsel for the plaintiff before the trial Court was also relating to the readiness and willingness on the basis of notice, telegram and the application for lodgment schedule to deposit the amount. The learned Trial Judge without verifying as to whether the amount was deposited in pursuance of such application for lodgment schedule was carried away by the arguments of the learned counsel for the plaintiff and the factum of issuance of lodgment schedule was also taken as a ground to come to a conclusion that the plaintiff was always ready and willing to perform his part of the contract.

37. The conduct of the plaintiff would clearly show that he was making use of the lodgment schedule as a piece of evidence to prove his continuous readiness and willingness. However, mere receipt of lodgment schedule would not serve any purpose. If there was no condition to deposit the amount as per the agreement entered into between the parties, there was no necessity to make deposit simultaneous with institution of the suit for specific performance. Therefore, it was only in pursuance of the binding contractual term as found in Ex.A-1, plaintiff has applied for issuance of challan. However, the plaintiff has conveniently omitted to note the fact that the mandatory provision as contained in Ex.A-1 was for deposit of money before the trial Court simultaneous with the institution of suit for specific performance and not making an application for issuance of challan without a follow up action to deposit the balance consideration. The necessity to make the deposit before the Court along with the suit assumes significance in the present case on account of the contention of the defendants that the plaintiff was not having the balance sale consideration with him and that was the only reason for the delay. There was no attempt made by the plaintiff to prove his financial capacity before the Court. Plaintiff has not even produced his bank pass book or his account book to demonstrate his financial position. He has not produced the license issued by the Government empowering him to do business as a pawner. Therefore, other than the interested testimony of PW-1, there was nothing before the Court to come to a definite conclusion that the plaintiff was having necessary amount with him to perform his part of the contract. The Demand Draft taken on 06.04.1995 and deposited before the Court on 07.04.1995 cannot be taken as proof to show that balance consideration was paid during the currency of the agreement period as the time limit for payment of the balance sale consideration expired as early as on 29.06.1991. Institution of civil suit would not operate as extension of time for payment of balance sale consideration.

38. When the issue to be decided relates to the exercise of discretionary and equitable jurisdiction, the terms of contract voluntarily agreed to between the parties had to be respected. The Court cannot rewrite the terms of contract for the parties. Plaintiff was given liberty to file a suit for specific performance subject to the condition of paying the balance sale consideration. Though the agreement provides that deposit has to be made before instituting the suit for specific performance, the deposit must at least be simultaneous with the institution of the suit. Non compliance of the mandatory condition itself dis-entitles the plaintiff from obtaining an equitable remedy of specific performance.

39. The conduct of the plaintiff in this case was not above board. Plaintiff has not produced even a scrap of paper to show his readiness to pay the balance amount at any point of time. He has not purchased the stamp papers though it was a mandatory requirement as per Ex.A-2. Probably, plaintiff wanted to procure money from third parties. The fact that the amount was not deposited along with the suit and ultimately it was deposited after the decree is a pointer towards that direction. In case he was ready with the money, nothing prevented the plaintiff from making deposit after getting the challan from the Court as early as on 27.06.1991.

40. It is true that as per the Lawyer's notice in Ex.A-3 and the telegram in Ex.A-6, plaintiff has shown his desire to get the sale deed executed. However, the desire to get the document executed was not followed by conduct. It was a mere desire on paper not accompanied by readiness and willingness to tender the balance sale consideration and purchase of stamp papers for the purpose of concluding the transaction. Mere desire to purchase the property was not sufficient. Plaintiff should be ready and willing to perform his part of the contract. Desire should be translated into action. In fact, plaintiff was having only the desire and not the money to conclude the contract.

41. The learned Trial Judge has adopted a very novel procedure. Failure on the part of the defendants to register the sale deed in spite of Ex.A-3 notice and Ex.A-6 telegram were considered to be proof of readiness and willingness on the part of the plaintiff. Remedy of specific performance being one in the realm of equitable jurisdiction, the burden was clearly on the plaintiff to prove the positive facts of readiness and willingness on his part. The defendants were not expected to prove the negative. Therefore, failure on the part of the defendants to execute the sale deed in spite of notice and telegram per se, was not sufficient to hold that the plaintiff was ready and willing to perform his part of the contract.

42. The learned Trial Judge appears to have decreed the suit on the basis of the arguments advanced on the side of the plaintiff with respect to the readiness and willingness as evident by Ex.A-3 and Ex.A-6 and the application for lodgment schedule to deposit the balance sale consideration. However, there was no attempt on the part of the trial Court to verify as to whether there was really any genuine attempt made by the plaintiff to perform his part of the contract by tendering the balance sale consideration and making everything possible to execute the document. The defendants were not in a very good financial condition which was evident from the statement in Ex.A-2. In fact, the plaintiff was well aware of the poor financial condition of the defendants which made him to state expressly in his plaint that the defendants were in dire need of money which made them to call upon him to pay a further sum of Rs.10,000/- within one month from the date of execution of Ex.A-1. Therefore, the plaintiff was only making use of the pitiable condition of the defendants. The defendants were consistent in their stand and there was no attempt on their part to avoid the contract. It is evident from the agreement, pleadings and evidence tendered by PW-1 and DW-1 that the property was sold only for the business purpose of the defendants and they were in urgent need of money. When the very property was sold to meet out the financial crisis, it cannot be said that it was only the defendants who took one year time to conclude the transaction. In case the plaintiff was having the balance consideration of Rs.15,000/- with him, nothing prevented him from tendering the said amount on 15.07.1990 itself and to get the document executed. Therefore, the only possible conclusion which could be drawn is that it was only on account of the inability of the plaintiff to muster necessary funds, completion of the sale was delayed. Contention of the plaintiff before the trial Court was to the effect that he has paid major portion of the sale consideration and it was only a small portion which was kept as balance. The contention of the learned counsel for the plaintiff before this Court was also the same. However, the fact remains that it was only the plaintiff who was not having the balance sale consideration to complete the sale. There is not even a whisper in the agreement or in the plaint as well as in the evidence of PW-1 to the effect that the condition relating to the period of one year was inserted only at the instance of the defendants. Therefore, on a careful consideration of the entire factual matrix, I am of the view that the plaintiff had miserably failed to prove that he was ready and willing to perform his part of the contract.

43. In the first appeal, the Appellate Court is obliged to frame the points for consideration for deciding the legality and correctness of the lower Court judgment. The Appellate Court is also bound to consider the matter independently and to arrive at a conclusion. In the subject case, the learned Trial Judge has not rendered any definite finding about the readiness and willingness on the part of the plaintiff to perform his part of the contract. The learned Trial Judge has only recorded the submission made by the learned counsel for the plaintiff pertaining to the readiness and willingness on the part of the plaintiff on the basis of Ex.A-3 and Ex.A-6 and the lodgment schedule, and has given seal of approval to the said argument by holding that the in action on the part of the defendants to execute the sale deed after receiving the balance consideration was ample proof of the fact that the plaintiff was ready and willing at all point of time. The said finding has no factual basis. In fact, the learned Trial Judge attempted to decree the suit not on the basis of the positive case pleaded by the plaintiff but on the basis of the alleged falsity of the case put forward by the defendants.

Legal principles on specific performance :-

44. In N.P.Thirugnanam vs. R.Jagan Mohan Rao (Dr), (1995) 5 SCC 115, the legal position with respect to the discretionary relief of specific performance was indicated by the Supreme Court thus :-

"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 has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract.

45. In Pukhraj D.Jain v. G.Gopalakrishna, (2004) 7 SCC 251, the Supreme Court held that not only should there be an averment in the plaint that the plaintiff was ready and willing to perform his part of the contract but surrounding circumstances must also indicate that the readiness and willingness continued from the date of contract till hearing the suit. The legal position was explained in the following words :-

"6.Section 16(c) of the Specific Relief Act lays down that specific performance of a contract cannot be enforced in favour of a person 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 (ii) to this sub-section provides that the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. The requirement of this provision is that the plaintiff must aver that he has always been ready and willing to perform the essential terms of the contract. Therefore, not only should there be such an averment in the plaint but the surrounding circumstances must also indicate that the readiness and willingness continue from the date of the contract till the hearing of the suit."

46. In Gobind Ram v. Gian Chand , (2000) 7 SCC 548, the discretionary jurisdiction of specific performance was indicated by the Supreme Court thus :-

"7.It is the settled position of law that grant of a decree for specific performance of contract is not automatic and is one of the discretions of the court and the court has to consider whether it will be fair, just and equitable. The court is guided by principle of justice, equity and good conscience. As stated in P.V. Josephs Son Mathew the court should meticulously consider all facts and circumstances of the case and motive behind the litigation should also be considered."

47. In K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1, petitioners before the Supreme Court entered into an agreement with the respondent to sell their property. However, the sale was not concluded and in the meantime, the property value in Madurai has increased tremendously. Trial Court had granted the relief of specific performance and it was reversed by the High Court with an observation that the plaintiff has been requesting for execution of the sale deed by the defendants. Before the Supreme Court, the plaintiffs contended that time was not the essence of contract in the case of an immovable property and as such, rise in price in the meantime cannot be a reason to reject the prayer for specific performance. Supreme Court examined the entire issue in the light of the earlier decisions and observed thus :-

"11. ... May be, the parties knew of the said circumstance but they have also specified six months as the period within which the transaction should be completed. The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent? All this only means that while exercising its discretion, the court should also bear in mind that when the parties prescribe certain time-limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to immovable properties).

48. In Sita Ram v. Radhey Shyam,(2007) 14 SCC 415 :: 2007 (11) Scale 626, the Supreme Court indicated the necessity of examining the conduct of the person seeking the relief of specific performance thus :-

10.The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The court is to grant relief on the basis of the conduct of the person seeking relief. If the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the relief. (See Aniglase Yohannan v. Ramlatha and ors. [2005(7) SCC 534].

49. In Azhar Sultana vs. B.Rajamani and others, 2009(3) Scale 159, the salient features of Section 16(C) of the Specific Relief Act was considered by the Supreme Court and it was observed thus :-

"17.Section 16(c) of the Specific Relief Act, 1963 postulates continuous readiness and willingness on the part of the plaintiff. It is a condition precedent for obtaining a relief of grant of specific performance of contract. The Court, keeping in view the fact that it exercises a discretionary jurisdiction, would be entitled to take into consideration as to whether the suit had been filed within a reasonable time. What would be a reasonable time would, however, depend upon the facts and circumstances of each case. No hard and fast law can be laid down therefor.

The conduct of the parties in this behalf would also assume significance."

50. In Lourdu Mari David v. Louis Chinnaya Arogiaswamy, (1996) 5 SCC 589, the issue before the Supreme Court was regarding the specific performance of the agreement to sell the property. The suit filed by the plaintiff was dismissed by the trial Court on the ground that the property was sold to a bona fide purchaser for value without notice. The decree was confirmed in first appeal. In the further appeal before the Division Bench, a finding was rendered to the effect that the plaintiff has not come to the Court with clean hands. When the matter was taken up before the Supreme Court, it was found that false contentions were raised by the plaintiff in the suit. The Supreme Court was of the view that specific performance being an equitable relief, any party who comes to the Court with unclean hands should be denied the remedy. The relevant paragraph would read thus:-

"2.It is settled law that the party who seeks to avail of the equitable jurisdiction of a court and specific performance being equitable relief, must come to the court with clean hands. In other words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief."

51. In Umabai and another vs. Nilkanth Dhondiba Chavan (dead) by Lrs and another, 2005(6) SCC 243, necessity to produce some evidence to show that the plaintiff was in a position to arrange the balance sale consideration was indicated by the Supreme Court thus :-

"33. ... There must, thus, be some evidence to show that the plaintiff could arrange for the amount stipulated for payment to the vendor as and when called upon to do so."

52. The necessity to approach the Court with clean hands in a suit for specific performance was indicated by the Supreme Court again in Mohammadia Coop. Building Society Ltd. v. Lakshmi Srinivasa Coop. Building Society Ltd.,(2008) 7 SCC 310 thus :-

"71. Grant of a decree for specific performance of contract is a discretionary relief. There cannot be any doubt whatsoever that the discretion has to be exercised judiciously and not arbitrarily. But for the said purpose, the conduct of the plaintiff plays an important role. The courts ordinarily would not grant any relief in favour of the person who approaches the court with a pair of dirty hands."

53. In Pushparani S. Sundaram v. Pauline Manomani James,(2002) 9 SCC 582, the readiness and willingness within the meaning of Section 16(c) of Specific Relief Act, was considered by the Supreme Court and it was observed thus:-

"5. ... So far these being a plea that they were ready and willing to perform their part of the contract is there in the pleading, we have no hesitation to conclude, that this by itself is not sufficient to hold that the appellants were ready and willing in terms of Section 16(c) of the Specific Relief Act. This requires not only such plea but also proof of the same. Now examining the first of the two circumstances, how could mere filing of this suit, after exemption was granted be a circumstance about willingness or readiness of the plaintiff. This at the most could be the desire of the plaintiff to have this property. It may be for such a desire this suit was filed raising such a plea. But Section 16(c) of the said Act makes it clear that mere plea is not sufficient, it has to be proved."

54. The Supreme Court in G.Jayashree v. Bhagwandas S. Patel,(2009) 3 SCC 141, indicated the concept of discretionary jurisdiction thus :-

"32. The civil courts, in the matter of enforcement of an agreement to sell, exercise a discretionary jurisdiction. Discretionary jurisdiction albeit must be exercised judiciously and not arbitrarily or capriciously. A plaintiff is expected to approach the court with clean hands. His conduct plays an important role in the matter of exercise of discretionary jurisdiction by a court of law.

55. In a recent judgment reported in 2009(13) Scale 457 (A.K.Lakshmipathy (dead) and Ors. vs. Rai Saheb Pannalal H.Lahoti Charitable Trust and Ors.), the Supreme Court indicated the basic requirement for obtaining a decree of specific performance thus :-

"Next is the question whether the appellants were ready and willing to complete their part of the agreement. It is well settled that in a suit for specific performance of a contract for sale, it has to be proved that the plaintiff who is seeking for a decree for specific performance of the contract for sale must always be ready and willing to complete the terms of the agreement for sale and that he has not abandoned the contract and his intention is to keep the contract subsisting till it is executed".

56. In M/s.Ramnath Publications Pvt. Ltd rep. By its Managing Director and another Vs. A.R.Madana Gopal and others, a Division Bench of this Court referred to the judgments rendered by the Supreme Court pertaining to Section 16(c) of Specific Relief Act and observed thus :-

"36. From the above decisions, it would be quite clear that in order to satisfy the requirements of Section 16(c) of the Specific Relief Act, mere plea though specifically made in the suit for specific performance, that the plaintiffs were ready and willing would not be sufficient. But, that must be proved by acceptable evidence. In the instant case, even the statement of PW-1 in the box that the plaintiffs were all along ready and willing to perform their part of the contract by paying the balance of convenience would not be sufficient."

57. In Lakshmipathy case cited supra, the Supreme Court observed that the best evidence for readiness and willingness was the factum of payment of balance consideration before agitating the matter for specific performance. It reads thus :-

"In order to show that the appellants were all ready and willing to perform their part of their obligation to complete the agreement was to bear the remaining amount of the contract and then agitate the matter for specific performance before the Court. This was also the view expressed by this Court in Chand Rani vs. Kamal Rani (Supra) wherein this Court held that if the final ultimatum by the seller has been given for payment of balance amount then the best thing for the purchasers is to pay the amount and then take appropriate steps". (emphasis supplied).

58. The learned counsel for the plaintiff placed reliance on the judgment of the Supreme Court in Balasaheb Dayandeo Naik (Dead) through Lrs. And ors. vs. Appasaheb Dattatraya Pawar, 2008(1) CTC 530 in support of his contention that the prayer for refund of earnest money as an alternative claim would not dis-entitle the plaintiff from claiming a decree of specific performance.

59. There is no dispute with respect to the said legal position. The contention raised by the learned counsel for the defendants that in view of quantification of damages by the plaintiff, he was dis-entitled from seeking a relief of specific performance has no legal sanction. It is trite that the claim for alternative relief of damages would not dis-entitle the plaintiff from seeking the relief of specific performance.

Findings in a nutshell :-

(a) On Readiness and willingness :-

60. The following points would show that the plaintiff was not ready and willing to perform his part of the contract :-

(a) Recitals in Ex.A-2 and the plaint averments proceeds on the footing that the defendants were hard pressed for money. However, time limit for concluding the sale was stipulated as one year. There was nothing to be done on the part of the defendants to complete the transaction except signing the sale deed. There was no attempt at the instance of the plaintiff to pay the balance sale consideration, purchase of stamp papers and preparation of sale deeds.

(b) Notice in Ex.A-3 was issued on 05.04.1991 and it was followed by telegram in Ex.A-6 dated 26.04.1991. Defendants have not come forward to register the document even after receiving the telegram. Therefore, the plaintiff was sure that the defendants were not prepared to execute the sale deed. However, the suit was filed after a period of two months and that too just two days prior to the expiry of time prescribed for performing the contract.

(c) As per Ex.A-1 and Ex.A-2, while instituting the suit for specific performance, plaintiff has to deposit the balance sale consideration in Court. However, no such deposit was made in spite of obtaining a challan for making deposit.

(d) In Ex.A-2, it was specifically stated that the plaintiff has to tender the balance sale consideration, purchase the stamp papers and prepare the document and then call upon the vendor to execute the document. However, the stamp papers were not purchased at any point of time.

(e) Though it was stated in Ex.A-3 and Ex.A-6 that the plaintiff was ready and willing to perform his part of the contract, there was no follow up action to tender the balance sale consideration. The remaining amount of sale consideration was deposited only after the decree.

(f) Though it was stated in the evidence of PW-1 that he was having sufficient funds to pay the balance sale consideration, not even a scrap of paper was produced to show his financial capacity.

(g) The application for issuance of lodgment schedule was made on the basis of a recital in Ex.A-1 and Ex.A-2 which was an essential term of contract. However, even after obtaining the challan from the Court on 27.06.1991, plaintiff failed to deposit the amount.

(b) On failure to approach with clean hands:-

61. The following factors would indicate that the plaintiff has not come to the Court with clean hands and as such, he was not entitled to the discretionary relief of specific performance :-

(i) In the plaint, it was stated that the plaintiff approached the defendant on many occasions to conclude the sale. It was further stated that even after the issuance of Ex.A-3 notice and Ex.A-6 telegram, the plaintiff contacted the defendants and called upon them to conclude the sale. However, not even a single date was mentioned as to the particular day on which the plaintiff approached the defendants personally. The cause of action paragraph in the plaint also does not contain any averment with respect to the meeting between the plaintiff and the defendants for the purpose of concluding the agreement both prior to Ex.A-3 and Ex.A-6 and subsequently. Therefore, it was a false representation made with an intention to obtain the equitable relief.

(ii) In the plaint, it was stated that to prove the readiness and willingness, he has applied for lodgment schedule to deposit the balance sale consideration in Court. Accordingly, challan was issued by the Court on 27.06.1991. There was a direction to pay the amount in Court deposit as per the Order passed by the trial Court. However, the amount was not deposited.

(iii) PW-1 deposed before the trial Court that he was ready and willing at all point of time and the factum of filing application for lodgment schedule was taken as an element of proof to substantiate his contention. However, he has not disclosed before the Court that the amount was not deposited in spite of the issuance of challan by the Court. The said fact was not within the knowledge of the defendants and as such, undue advantage was taken by the plaintiff making use of the ignorance of the Court as well as the defendants with respect to non-deposit.

(iv) In Ex.A-1 and Ex.A-2, there was a clear recital that before filing a suit for specific performance, the plaintiff has to deposit the balance sale consideration. However, while drafting the plaint, the essential term which was inserted as a condition precedent for obtaining the relief of specific performance was deliberately omitted.

(v) The conduct of the plaintiff was not unblemished and his attempt was to obtain a decree by suppression of material particulars.

(vi) The trial Court was made to believe that the balance sale consideration was deposited and accordingly, the same was taken as a ground to prove the bonafides of the plaintiff.

Statutory bar under Section 16 of the Act :-

62. Section 16 of the Specific Relief Act contains illustrations with respect to cases wherein specific performance of contract cannot be enforced in favour of a person. As per Section 16(b), specific performance of a contract cannot be enforced in favour of a person who has become incapable of performing, or violates any essential term of the contract. Therefore, in case the plaintiff was guilty of violation of a material term of contract, the said fact was a bar for granting the relief of specific performance. In the case on hand, there was a specific recital in Ex.A-1 and Ex.A-2 to the effect that for obtaining the relief of specific performance, the plaintiff has to deposit the balance sale consideration before the trial Court along with the suit. The said condition was an essential term of contract. The plaintiff was well aware of the said condition which made him to make a statement in the plaint to the effect that he has applied for lodgment schedule to deposit the amount. The plaintiff has also obtained a challan for depositing the amount as per the Order passed by the trial Court on 27.06.1991. However, the amount was not deposited for reasons best known to the plaintiff. Therefore, he has violated the essential term of contract which would dis-entitle him from obtaining a decree of specific performance. Therefore, the bar, as contained under Section 16 is attracted in the present case.

63. The factual matrix as explained above clearly shows that the plaintiff was guilty of suppression of material facts and he has not come to the Court with clean hands. Plaintiff has also violated the essential term of contract. While deciding the question as to whether the plaintiff was entitled to the discretionary remedy of specific performance, trial Court was bound to consider the terms and conditions of sale agreement and more particularly, the term which gives cause of action to file the suit for specific performance. Therefore, the only possible conclusion is that the plaintiff was not ready and willing to perform his part of the contract and that he has not come to the Court with clean hands and therefore, he is dis-entitled from claiming a decree for specific performance. Accordingly, the point Nos.1 and 2 are decided against the plaintiff and in favour of the defendants.

64. The third point relates to the alternative remedy of refund of the advance amount with interest.

Alternative prayer :-

65. Though the primary relief claimed by the plaintiff was a decree of specific performance, he has quantified damages and an alternative decree for refund with interest was claimed.

66. According to the plaintiff, he would have earned at least 18% p.a. from the date of agreement, if he had invested the advance amount in any approved financial institution. Though the plaintiff is not entitled for the equitable remedy of specific performance of agreement, the fact remains that he has parted with a sum of Rs.1,50,000/- on 29.06.1990 and another sum of Rs.10,000/- on 15.07.1990. Defendants have also confirmed the factum of such payment. Section 21 of the Specific Relief Act, 1963 provides for awarding compensation in certain cases. Therefore, the plaintiff is entitled to the refund of the amount with appropriate interest. There was nothing indicated in the written statement filed by the defendants as to whether interest claimed was excessive. Therefore, I am of the view that the plaintiff is entitled to a decree for refund of Rs.1,60,000/- with interest @ 18% from the date of plaint till the date of realization.

Disposal :-

67. In the result, the judgment and decree dated 05.04.1995 in O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam is set aside. The prayer for granting a decree of specific performance is rejected. The plaintiff is granted the alternative decree for refund of the advance amount with simple interest @ 18% p.a. from the date of plaint till the date of realization.

68. The appeal is allowed as indicated above. No costs.

tar To

1. The Subordinate Judge, Tindivanam

2. The Section Officer, V.R. Section, High Court, Madras