1. This second appeal is directed against the judgment and decree dated 13.04.2001 passed by Sri Narendra Kumar Jain, Xth Additional District Judge, Kanpur Nagar allowing the Civil Appeal No. 87 of 2001 and setting aside the judgment and decree dated 19.11.1996 passed by Sri Ved Prakash Gaur, IIIrd Additional Civil Judge, Kanpur Nagar in Original Suit No. 153 of 1982.
2. Plaintiff instituted a suit praying for a decree of specific performance of contract and mandatory injunction against the defendants.
3. The case of the plaintiff is that it is a company engaged in the tanning of leather; that in 1974 an advertisement was published by the defendant no. 1, Nagar Mahapalika Kanpur advertising auction for lease of plot no. 1 (area 2 bighas) Block-D, Scheme No. 39, Zajmau, Kanpur Nagar on 05.05.1974 through public auction; that plaintiff required the land for the business and therefore, participated in the aforesaid public auction; that one of the condition of auction was that the highest bidder would be required to deposit 1/4th of bid amount just after the acceptance of the bid and remaining 3/4th amount within 30 days; that no one was willing to purchase the plots on the above terms of the auction and, therefore, the defendant no. 1 altered the condition to the effect that if the deposit of 1/4th amount is made immediately, the remaining 3/4th amount will have to be deposited by the highest bidder in twelve-6 monthly installments alongwith 9% interest per annum; that it was also provided in the terms of auction that the possession of the plot shall be delivered to the purchaser on the date his bid is accepted and lease holder would be required to pay Rs. 10 annually towards lease rent which would be for a period of 99 years; that on the basis of the altered terms of auction, plaintiff made bid @ Rs. 1,12,000/- per bigha and he deposited 1/4th of the bid amount of Rs. 5,000/- on 05.05.1974 with the auction agent; thereafter on 06.05.1974, he paid Rs. 5,000/- more and finally on 24.05.1974 the plaintiff paid Rs. 46,000/- to the defendant no. 1 through bank draft which was duly received and receipt was issued in favour of plaintiff; that on 25.05.1974, the defendant no. 1 confirmed the auction in favour of plaintiff after receiving the amount of Rs. 56,000/-; that the plaintiff wanted to start his leather business at the earliest over the land in dispute, therefore it sent a letter dated 11.09.1974 to the Sahayak Nagar Adhikari (Vikray) of defendant no. 1 praying for physical possession over the plot in dispute; that plaintiff further informed the defendant no. 1 that people residing near the plot in dispute are changing its nature by digging mud therefrom; that on 30.11.1974 plaintiff again sent a letter to the defendant no. 1 to provide him actual physical possession so that the plot may be protected; that defendant no. 1 sent a reply dated 06.12.1974 informing the plaintiff that actual physical possession over the plot shall only be delivered after the lease deed is executed in its favour and directed the plaintiff to submit the required stamp papers for execution of lease deed before him; that on 18.03.1976 defendant no. 1 sent a letter to the plaintiff directing him to purchase stamp paper of Rs. 35973.75/- so that the lease deed may be executed in his favour; that on 20.03.1976, the plaintiff requested the defendant no. 1 to clarify as to how the stamp papers of the aforesaid amount are required and defendant no. 1 replied that he may contact Sub-Registrar in this regard; that the plaintiff approached the Sub-Registrar, Kanpur who informed that the Government has imposed a ban on registration of transfer deeds since Ceiling Act is about to be promulgated and he also informed that he cannot tell when permission for execution of sale deed would be granted by the Government and what would be the required stamp duty payable thereon; that the plaintiff approached defendant no. 1 and informed about the information given by Sub-Registrar and defendant no. 1 directed him to wait for some time; thereafter plaintiff sent several letters to the defendant no. 1 but no reply was given; that on 09.03.1977, a letter was sent by the defendant no. 1 directing the plaintiff again to submit the stamp papers of Rs. 35973.75/-; that plaintiff again met defendant no. 1 and inquired about the demand and stated that he has already spent Rs. 56,000/- and has got nothing is return; that the defendant no. 1 also did not issued "No Objection Certificate" to the plaintiff to start the business which was required for starting the business; that plaintiff was always ready and willing to get the lease deed executed in his favour from the defendant no. 1 and on 25.06.1979 he purchased stamp paper of Rs. 35973.75/- and requested that lease deed may be executed in his favour but nothing was done; that on 08.12.1981, the plaintiff sent a notice under Section 80 C.P.C. to the defendant no. 1 praying that within the period of notice, lease deed may be executed but in vain hence the suit was instituted.
4. The defendant nos. 1 and 2 filed joint written statement stating that the plaintiff Firm is not registered and, therefore, suit cannot proceed; that defendants admitted participation of plaintiff in the auction and emerging as highest bidder therein; that defendant nos. 1 and 2 stated that as per the terms of auction, plaintiff was required to deposit 1/4th amount at the time of auction and, thereafter, remaining amount was payable within 30 days but possession of the plot was to be given only after execution of lease deed; that the terms of auction were never varied by the defendants except that 3/4th amount which was payable by the auction purchaser within 30 days was made payable in twelve-6 monthly installments along with 9% interest; that the defendant nos. 1 and 2 stated that auction of plot no. 1, area about 2 acre was made for an amount of Rs. 1,12,000/- per acre on 05.05.1974 and the sale was confirmed on 25.05.1974; that defendants gave notices dated 12.11.1974, 06.12.1974 and 07.08.1975 and also notices dated 18.03.1976, 09.03.1977 stating that 1/4th amount deposited by him has been found to be short and he should deposit the balance forthwith but in vain; that the plaintiff was directed to purchase and submit the necessary stamp papers for execution of the lease deed but he never supplied the same, therefore, the defendant nos. 1 and 2 had no option but to cancel the auction and forfeit the amount deposited by the plaintiff; that plaintiff has no right over the plot in dispute; that now the plot in dispute has been saved under the Zonal Master Plan and no right of the plaintiff remains over the same; that when the plaintiff had demanded no objection certificate for making construction over the plot in dispute, he had no right over the same and, therefore, the same was not given to him; that the Vice President of defendant no. 2 has canceled the auction in favour of plaintiff by the order dated 08.01.1978 and has forfeited the 1/4th amount deposited by it and, therefore, the suit of the plaintiff is not maintainable; that Vice President has directed fresh auction of the plot and, therefore, the suit for injunction can not proceed; that the suit is barred by time and Section 571 of the Nagar Mahapalika Act; that the notice under Section 80 C.P.C. is illegal and the suit deserves to be dismissed.
5. On the basis of the pleadings of the parties, the learned trial court framed the following issues:-
(1) Whether the suit is barred of the provisions of Indian Partnership Act and frame of suit is bad in law accordingly?
(2) Whether the plaintiff is not entitled to the file the suit?
(3) Whether the plaintiff complied with terms and conditions of auction sale? If so, its effect?
(4) Whether the plaintiff was entitled to call for issue of "No Objection Certificate" before execution of lease deed?
(5) Whether defendants were entitled to call for deposit of interest on the balance of the sale consideration as alleged in plaint?
(6) Whether the act of the defendant in forfeiting of 1/4th of the advanced money and canceling the allotment is illegal as alleged in the plaint?
(7) Whether the suit is time barred?
(8) Whether the plaintiff or the defendants committed breach of conditions of auction sale?
(9) Whether the suit is not maintainable as alleged in the written statement?
(10) Whether the ground of suit vis-a-vis the relief prayed for is bad in law?
(11) Whether the suit is not properly valued and the Court fees paid is insufficient?
(12) Whether the suit is barred by provisions of Section 571 U.P. Nagar Mahapalika Adhiniam?
(13) Whether the notice under Section 80 C.P.C. served by the plaintiff on the State of U.P. is illegal?
(14) To what relief, if any, is the plaintiff entitled.
6. The learned trial court decided issue nos. 1, 2 and 9 against the defendants and held the suit to be maintainable. Issue no 11 regarding valuation was also decided in favour of plaintiff and issue no. 10 was not pressed. Issue nos. 12 and 13 were decided holding the suit was not barred by Section 571 of U.P. Nagar Mahapalika Adhiniam and Section 80 C.P.C. Issue nos. 3, 4, 6, 7 and 8 were decided in favour of plaintiff holding that the defendants have violated the terms of auction and the suit of the plaintiff was decreed treating it within the prescribed period of limitation. Issue no. 5 was decided holding that the 9% interest demanded by the defendants is justified. The learned trial court decreed the suit of the plaintiff as per decision of issue no. 14.
7. Aggrieved by the judgment and decree of the trial court defendants preferred Civil Appeal No. 87 of 2001 before the lower appellate court which decided the issue nos. 1, 2 & 9 regarding maintainability of suit on the basis of the arguments of the learned counsel for the appellant in affirmative.
8. Regarding the issue nos. 3, 4, 6, 7 and 8 the lower appellate court came to the conclusion that it was the plaintiff who violated the terms of contract and his demand of "No Objection Certificate" prior to the execution of lease deed was unjustified and defendants have not violated any terms of the auction. The lower appellate court further found that the auction in favour of the plaintiff has not been approved nor the defendants have been able to prove that the 1/4th amount deposited by the plaintiffs has been forfeited. Finally, the lower appellate court came to the conclusion that suit of the plaintiff was barred by time since on 09.01.1979 the defendants refused to execute the deed and, therefore, the limitation started running from 09.01.1979 and the suit could have been instituted by 08.01.1982 but it was instituted on 22.03.1982 and, therefore, the suit was barred by time. The judgment and decree of the trial court were reversed and the civil appeal of the defendants was allowed by the lower appellate court.
9. This second appeal has been preferred against the judgment and decree of the lower appellate court and it was admitted on the following substantial questions of law:-
1. Whether the lower appellate court erred in holding that the limitation will start from 09.01.1979 and as such the suit filed on 22.03.1983 was barred by time?
2. Whether the lower appellate court having found that the defendants have failed to prove that auction was cancelled or the amount was forfeited, it erred in not decreeing the suit?
3. Whether the plaintiff was always ready and willing to get lease deed executed and he did all what it could do and hence the decree of lower appellate court is unsustainable?
4. Whether the lower appellate court erred in dismissing the suit in toto and not decreeing it for the refund of the amount?
10. Learned counsel for the plaintiff-appellant has argued that the auction of a plot of land for allotment on lease was held on 05.05.1974 and plaintiff being highest bidder, auction was confirmed on 25.05.1974 in its favour.
11. Regarding issue no. 6, which relates to the cancellation of the allotment and forfeiture of the amount of advance auction money deposited by the plaintiff, the trial court recorded finding on the basis of evidence that neither the contract has been cancelled nor amount has been forfeited. The appellate court while deciding the aforesaid issue no. 6 confirmed the said finding that the contract was neither cancelled nor the amount was forfeited. Once the respondent has not cancelled the contract of sale nor forfeited the amount deposited by the plaintiff it shows that contract is alive. Since no date of performance or outer limit was fixed hence suit for specific performance of contract has not become time barred, when it was instituted.
12. The trial court has discussed issue no. 7 and recorded the finding that suit is well within time after considering impact of article 54 of the Limitation Act, 1963. The appellate court has decided and has accepted that there was no time limit fixed in the terms of agreement for execution of lease deed. However, appellate court has observed that the stamps have been purchased on 09.01.1979 by the plaintiff worth Rs. 35,975.50 and thereafter he had contacted the officials of defendant no. 2 with request to accept the stamps purchased by him but the officials refused to accept the same hence the date of refusal would be starting point of limitation of three years of contract for the purpose institution suit for Specific Performance, of contract. This view of the lower appellate court is wholly erroneous.
13. Article 54 of the Limitation Act 1963 provides for 3 years period of limitation for filing the suit for specific performance of a contract as follows:-
"The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused"
14. In this case no notice was issued to the plaintiff by the defendant refusing performance of contract. Limitation did not run within the meaning of Art 54 of the Limitation Act. The appellate court has presumed that the day when the officer of the K.D.A. had refused to accept the stamps purchased by the plaintiff, is the date of refusal. There is no evidence on the record as to what is the date on which the notice was issued by the defendants for performance of contract to the plaintiff for the purposes of Article 54 of the Limitation Act.
15. According to "Law Lexicon" notice in the legal sense has a different meaning. It means definite, positive intimation in writing showing legal consequences. Notice is a direct statement by which knowledge is conveyed. In such matter notice has to be in writing because from notice legal Inference is to be drawn, The Law Lexicon further defines actual notice, constructive notice and the definition of notice.
16. The Hon'ble Supreme Court in Ahmad Shah Abdul Mulla vs. Bibi Jaan (2009) 5SCC 462 held that "the date was fixed or not the plaintiff had notice that performance is refused and the date thereof is to be established with reference to materials and evidence to be brought on record. The expression "Date" used in Article 54 of the Act definitely is suggestive of a specific date in the calendar.
17. In this regard the trial court has recorded a positive finding that till 23rd Oct, 1981, the plaintiff was requesting for compliance of the contract and admittedly till Oct, 1981 the defendant no. 2, did not gave any notice in writing that the contract has come to end. Similarly plaintiff had no notice or knowledge about the cancellation of the contract. Under the circumstances till Oct, 1981 the contract was not cancelled nor any information or notice of cancellation was given to the plaintiff, thus from the date of 22 Oct, 1981 suit could have been instituted within three years, upto 21 Oct, 1984. Once the Trial Court on the appreciation of the evidence has recorded a finding that suit was not barred by time, as contemplated under Art. 54 of the Limitation Act, it was not open for the appellate court to set aside the same without meeting the findings of the trial court.
18. The discretion of the Trial Court u/s 20 of the Specific Act being discretionary and equitable and in veiw of the finding that the suit was not barred by time on the basis of record and evidence, such relief granted by the Trial Court should not have been upset by the lower appellate court. Its view was neither arbitrary nor unreasonable nor based on unsound principles of law. Ultimately trial court recorded (while deciding the issue no. 14) the finding that the plaintiff was always ready to fulfil his part of contract, the respondent did not cancelled the contract, hence the plaintiff's suit was decreed.
19. In the case of Indrachand Jain vs. Motilal, 2009 (14) SCC 663 the Apex Court has observed that in suit for specific performance of contract willingness to perform is relevant. In para 13, 14, 15 and 16 of the judgment of the Apex Court in K. Prakash vs. B.R. Sampath Kumar, (2015), 1 SCC 596, it has been held:-
13. The High Court further held that in the agreement (Exhibit P-1) the parties have agreed that if the sale deed could not be executed by the defendant, he will repay a sum of Rs,. 10,90,000/-, According to the High Court, the recital in the agreement shows that it was not executed by the defendant with free mind and volition rather he was under pressure while executing those documents.
14. We have given our thoughtful consideration in the matter and perused the pleading and evidence. We are of the view that the High Court has not approached the issue in its right perspective and has committed serious error of law in holding that the agreement was executed by the defendant without free mind and volition and under some pressure. The agreement was executed on 15.12.2003 wherein it has been mentioned that the total consideration amount was 16,10,000/- and out of that part consideration of sum of Rs. 5,45,000/- was paid. The said agreement was followed by another letter dated 21.1.2004, executed by the respondent, the contents whereof are reproduced herein-below:-
"21.01.2004 "That on this 22nd day of January, 2004, I have executed the agreement of sale in favour of Sri K. Prakash, in respect of the House bearing No.2558, 11th Main Road, Subramanyanagara, Bangalore-560 010, to sell the same for a total sale consideration of Rs.16,10,000/- (Rupees Sixteen Lakhs Ten thousand only). In all I have received a sum of Rs.5,45,000/- (Rupees Five Lakhs Forty Five Thousand only) from K. Prakash and the balance sale consideration to be paid on or before 15.04.2004 evening, failing to pay the balance sale consideration as per the agreement dated 15.12.2004. This Agreement stands cancel. I agree for the same.
15. Indisputably, remedy for specific performance is an equitable remedy. The Court while granting relief for specific performance exercise discretionary jurisdiction. Section 20 of the Act specifically provides that the court' jurisdiction to grant decree of specific performance is discretionary but not arbitrary. Discretion must be exercised in accordance with the sound and reasonable judicial principles.
16. The King's Bench in Rookey's Case [77 ER 209; (1597) 5 Co.Rep.99] it is said :
"Discretion is a science, not to act arbitrarily according to men's will and private affection: so the discretion which is exercised here, is to be governed by rules of law and equity, which are to oppose, but each, in its turn, to be subservient to the other. This discretion, in some cases follows the law implicitly, in others or allays the rigour of it, but in no case does it contradict or overturn the grounds or principles thereof, as has been sometimes ignorantly imputed to this Court. That is a discretionary power, which neither this nor any other Court, not even the highest, acting in a judicial capacity is by the constitution entrusted with"
The Court of Chancery in Attorney General vs. Wheat [(1759) 1 Eden 177; 28 ER 652] followed the Rooke's case and observed :
"the law is clear and courts of equity ought to follow it in their judgments concerning titles to equitable estates; otherwise great uncertainty and confusion would ensue. And though proceedings in equity are said to be secundum discretionem boni vin, yet when it is asked, vir bonus est quis? The answer is, qui consulta partum, qui leges juraq servat. And as it is said in Rooke's case, 5 Rep. 99 b, that discretion is a science not to act arbitrarily according to men's will and private affection: so the discretion which is exercised here, is to be governed by rules of law and equity, which are to oppose, but each, in its turn, to be subservient to the other. This discretion, in some cases follows the law implicitly, in others or allays the rigour of it, but in no case does it contradict or overturn the grounds or principles thereof, as has been sometimes ignorantly imputed to this Court. That is a discretionary power, which neither this nor any other Court, not even the highest, acting in a judicial capacity is by the constitution entrusted with. This description is full and judicious, and what ought to be imprinted on the mind of every judge."
20. Finally, regarding the issue of limitation, paragraphs 39, 40, 41, 42, 43 and 44 of the judgment in the case of Rathnavathi & Anr vs Kavita Ganashamdas 2015 (5) SCC 223 has been referred to which is cited below:
39. This takes us to the next question as to whether suit for specific performance was barred by limitation prescribed under Article 54 of the Limitation Act?
40. In order to examine this question, it is necessary to first see the law on the issue as to whether time can be the essence for performance of an agreement to sell the immovable property and if so whether plaintiff in this case performed her part within the time so stipulated in the agreement?
41. The learned Judge J.C. Shah (as His Lordship then was), speaking for the Bench examined this issue in Gomathinayagam Pillai and Ors. Vs. Pallaniswami Nadar, AIR 1967 SC 868, in the light of English authorities and Section 55 of the Contract Act and held as under:
"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 Khodaram Irani v. Burjorji Dhunjibhai I.L.R. 40 Bom. 289 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 I.L.R. (1867) Ch. 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. 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."
42. In Govind Prasad Chaturvedi Vs. Hari Dutt Shastri and Anr., (1977) 2 SCC 539, this Court placing reliance on the law laid down in Gomathinayagam Pillai (supra), reiterated the aforesaid principle and held as under:
".......It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract. The intention to treat time as the essence of the contract may be evidenced by circumstances which are sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract.
Apart from the normal presumption that in the case of an agreement of sale of immovable properly time is not the essence of the contract and the fact that the terms of the agreement do not unmistakably state that the time was understood to be the essence of the contract neither in the pleadings nor during the trial the respondents contended that time was of the essence of the contract."
43. Again in the case reported in Smt. Chand Rani vs. Smt. Kamal Rani, (1993) 1 SCC 519, this Court placing reliance on law laid down in aforementioned two cases took the same view. Similar view was taken with more elaboration on the issue in K.S. Vidyanadam and Ors. v. Vairavan, (1997) 3 SCC 1, wherein it was held as under:
"It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement (which does not provide specifically that time is of the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time-limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit (s) specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani vs. Kamal Rani (1993) 1 SCC 519:
"....it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract, the Court may infer that it is to be performed in a reasonable time if the conditions are (evident?) : (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract." In other words, the court should look at all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973.
"......Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so......" The aforesaid view was upheld in K. Narendra vs. Riviera Apartments (P) Ltd. (1999) 5 SCC 77.
44. Applying the aforesaid principle of law laid down by this Court to the facts of the case at hand, we have no hesitation in holding that the time was not the essence of agreement for its performance and the parties too did not intend that it should be so.
21. Summoning up his arguments the counsel for the appellant has argued that from the aforesaid observations it is clear that by both the courts i.e., trial court and appellate court, have recorded a positive finding that contract has not been cancelled nor amount has been forfeited. Hence the defendant no. 2 is legally bound to perform the contract which is still subsisting and existing, the time had not started running out when the suit was instituted. He referred to Nainital Insurance Co. Ltd, Kanpur vs. Yogendra Nath, AIR 1982 Alld, 385 wherein it has been held in the last line of para 8 "the averments made in written statements could not take the place of proof unless the evidence is produced by the owner or insurer."
22. In Mademestty Satyanarayana vs. G. Yelloji Rao, AIR 1965 SC 1405 in para 11 it has been observed, that the conduct or neglect of plaintiff is directly responsible in inducing the defendant to change his position to his prejudice, then only the relief of specific performance could be refused. In this case without admitting if there was any delay in depositing the stamp papers till 1979, it was open for the defendant no. 2 to have cancelled the contract and forfeited amount. The fact that the defendant no. 2 till date has not cancelled the auction nor forfeited the amount in this background the relief could not be refused to the plaintiff, particularly when the trial court has exercised the discretion u/s 20 of Specific Relief Act.
23. Per contra, learned counsel for the respondents has argued that plaintiff had failed to deposit 1/4th amount of the auction sale on the fall of hammer and even after the repeated demands from the defendants, vide its letters dated 12.11.1974 and 18.03.1976 paper no. 57-ka and 59-ka and also by letters dated 09.03.1973 and 06.07.1977, 68-ka and 69-ka. Receiving of the letter dated 06.07.1977 69-ka has been acknowledged by the plaintiff vide letter 11 July 1977. Apart from the above, categorical finding has been recorded on his question by the lower appellate court.
24. He has further submitted that in view of clause 10 of the undertaking the plaintiff himself had authorized the defendant to forfeit the 1/4th amount deposited and lease out the plot to any other party. As such there was no need of proving by the defendants, the fact that the auction was cancelled and the amount was forfeited. It has be specifically pleaded in para no. 11 and 25 of the written statement filed by the defendant.
25. Again the plaintiff has failed to prove that he has complied the terms of the undertaking. It is fully established from the documentary and oral evidence on record that the plaintiff has not paid the 1/4th amount of auction money nor supplied required stamp papers and has not paid even a single installment towards the balance 3/4th of auction sale amount. Moreover, both the court's below have recorded finding on this point against the plaintiff.
26. The judgment of the lower appellate court is fully supported by the documentary and oral evidence on record. The plaintiff himself vide clause 10 of undertaking, paper no. 67-ka, had authorized the defendant to unconditionally forfeit the 1/4th amount of the auction sale price. The non compliance of the terms of undertaking by the plaintiff is quite evident from the above submission. However, during the course of argument the counsel for the defendant/respondent had conceded only for the decree refund of the 1/4th amount deposited by the plaintiff with the defendant along with 9% interest as desired by the plaintiff vide ground no. 15 as well as substantial question of law no. 4, framed in the memorandum of second appeal.
27. The facts and circumstances of the case and the case laws cited on behalf of the appellant are quite different. All the case laws are regarding the suit for specific performance of contract executed by the parties to the suit. Here in the instant case the plaintiff is an auction purchaser voluntarily binding himself to certain terms and conditions unilaterally. There is categorical findings of both the courts that the plaintiff had failed to fulfill the terms and conditions of the undertaking given by him.
28. The lease deed was to be executed and registered on the required stamp papers to be provided by the plaintiff which is said to have been purchased by him after five years of the auction sale. The defendant was to get the lease deed typed, as per the indenture of lease already approved by the plaintiff at the time of auction sale, on the stamp paper provided by the plaintiff and sign it. Since the plaintiff had failed to perform the terms and conditions of the undertaking imposed on him, there was no occasion for the plaintiff of filing suit for specific performance. Suit is also barred by time and has rightly been dismissed by the lower appellate court by reversing the decree of the trial court.
29. After hearing the rival contentions, the first argument regarding the failure of the plaintiff to deposit 1/4th amount of auction money immediately and thereafter payment of 3/4th amount in six monthly installments alongwith 9 percent interest per annum is required to be decided. It is the plaint case of the plaintiff that after the bid of the plaintiff was accepted, he deposited amount of Rs. 5,000/- on 05.05.1974 i.e., the date of auction, Rs. 5,000/- on 06.05.1974 and thereafter he paid Rs. 46,000/- on 24.05.1974 to the defendant no. 1 and on 25.05.1974 the defendant no. 1 confirmed the auction in favour of plaintiff after receiving Rs. 56,000/-.
30. The counsel for defendants has argued that the plaintiff was required to deposit 1/4th amount on the date of auction itself but he deposited the amounts in three installments and thereafter, even after the sale was confirmed on 25.05.1974, the defendants found that the amount is short by Rs. 3185/- and 75 paise and despite notices he never deposited the same. The remaining 3/4th amount was never deposited by the plaintiff and he started demanding "no objection" letter for making construction over the plot in dispute, even before execution of the lease deed in his favour, against the terms of auction which provided for delivery of possession of the plot only after execution of lease deed.
31. Pleadings show that the default on the part of the plaintiff in compliance of the terms and conditions of the contract is manifest from the pleadings of plaintiff. Despite repeated notices the plaintiff did not deposited the amount of Rs. 3185.75 paise. Therefore, it is clear that there is default on the part of the plaintiff is depositing the 1/4th amount and merely because the sale was confirmed in his favour, it cannot be held that by confirmation of sale the deficiency in deposit 1/4th amount stands wiped out. Since this plea was taken in the written statement by the defendant nos. 1 and 2 therefore this default can be relevant for the purposes of the testing the claim of readiness and willingness of the plaintiff to get the lease deed executed.
32. The second argument regarding clause 10 of the contract/undertaking that, the defendants are authorized to forfeit the 1/4th amount deposited and lease out the plot to third party in case the plaintiff fails to deposit the further amount as per the terms of contract, is required to be considered. The plaintiff has been found to have violated the vital term of contract of depositing 1/4th amount of auction money on the date of auction. Therefore, from the very inception of contract the default took place on the part of the plaintiff. Since the plaintiff himself authorized the defendant to terminate the contract in case of default on his part and the default is apparent from the plaintiff itself therefore the unilateral termination of the contract by the defendant no. 1 could not have been faulted with, if proved before the courts below. It is clear from Paper No. 57 Ka, on record that the plaintiff was given the notice on 12.11.1974 informing that he has not deposited the total 1/4th amount of auction sale and there was shortfall of Rs. 3185.75 paise. Thereafter, Paper No. 58 Ka dated 07.08.1975, Paper No. 59 Ka dated 12.03.1976 are on record which prove that despite demand, the plaintiff did not deposited the amount of shortfall in the 1/4th amount of auction money. In the aforesaid letters the plaintiff was also directed by the defendant no.2, Kanpur Development Authority, to deposit the stamp papers of Rs. 35,973.50 paise for registration of the deed in his favour but he did not provide the same. Similar letter Paper No. 60-Ka dated 09.03.1977, is on record, sent by the defendant no. 2 requesting the plaintiff to produce the stamp papers. Again Paper No. 68 Ka, dated 09.03.1977 and Paper No. 69, Ka dated 06.07.1977 are on record. The trial court has not considered this violation of the terms of contract by the plaintiff and has not recorded the finding that there was no such shortfall in the deposit. It has also recorded the finding that the defendants failed to explain under what head they are demanding Rs. 3185.75 paise. There is no such pleadings on behalf of the plaintiff that the demand of the defendants regarding this amount in their notice was wrong and therefore the finding of the trial court is beyond the pleadings and cannot be sustained. Plaintiff has not disclosed this default on his part in his plaint and has nowhere taken the plea that he was not required to pay Rs. 3185.75 paise to the defendants. A perusal of the written statement filed on behalf of the defendant nos. 1 and 2 shows that there is no objection raised therein regarding the deficit of Rs. 3185.75 paise in the deposit of 1/4th amount of auction money although the same is borne from the evidence on record and also raised by their counsel in the argument.
33. The default on the part of plaintiff in not getting the lease deed executed after supplying the necessary stamp papers for the same is found to be correct. Had the plaintiff produced the stamp papers on demand of defendants in the year 1974 itself on receiving the first letter dated 12.11.1974 or the second reminder dated 07.08.1975 the bonafide of the plaintiff regarding readiness and willingness to get the lease deed executed in its favour would have stood proved. Instead, the plaintiff sent letters questioning the demand and claiming possession and "no objection" for construction over the plot in dispute. Plaintiff was fully aware that without registration of the lease deed neither possession nor "no objection certificate" can be issued by the defendants as per the terms of the auction but it kept on making demands against the agreed terms of auction from the defendants which is a conduct which goes against its bonafides.
34. It is also notable that the plaintiff produced the stamp papers only in the year 1979, when the case of the defendants is that they canceled his contract on 08.01.1978. Both the courts below have not accepted, on the basis of the evidence on record, that the contract in favour of plaintiff was ever canceled. Being concurrent findings of fact this Court is not interfering with the same.
35. The argument of the counsel for the plaintiff that since no notice was ever sent to the plaintiff by the defendants to terminate his contract, therefore the period of limitation will run against him only when the plaintiff came to know that the specific performance of contract has been refused by the defendants. The trial court recorded the finding that till October, 1981, the contract was never canceled nor any notice of the same was given to the plaintiff and therefore the suit instituted in the year 1982 was well within the period of limitation. The argument of the counsel for the plaintiff cannot be faulted on this account keeping in view the authorities cited on this issue and it is held that the suit was not barred by time.
36. The only question remains whether the plaintiff was entitled to discretionary relief as per Section 20 of the Specific Relief Act.
37. The lower appellate court has considered this issue in detail and has found that since that plaintiff was required to get the lease deed executed after the deposit of the 1/4th amount of the auction money. Plaintiff was directed by the defendants to purchase the stamp papers for this purpose, but on one pretext or the other it avoided purchase of the stamp papers and did not produced the same. The stamp papers were purchase only in the year 1979 and in his cross-examination the plaintiff's witness failed to prove on whose direction he purchased the stamp papers in 1979 when he was being asked to purchase the same since 1974. The plaintiff has taken the plea that it did not purchased the stamp papers because the defendants did not informed about the details of demand of purchase of the stamp papers of Rs.35,973.50 paise and directed it to approach the Sub-Registrar for the same. Plaintiff further took the plea that Sub-Registrar asked him to wait for sometime since the Ceiling Act was about to be enforced.
38. Further plea was taken that the defendant did not issue "no objection certificate" for making construction over the land despite the demand and therefore plaintiff did not get the lease deed registered. All these pleas taken by the plaintiffs were found baseless by the lower appellate court because he could not prove the plea taken and therefore the delay of 5 years caused by him in getting the lease deed executed was found to be relevant for refusal of the exercise of discretion in his favour by the lower appellate court for decreeing the suit for specific performance of contract. Therefore the finding of the lower appellate court, that plaintiff himself was not willing to comply the terms of auction as per the contract with the defendants and therefore there is no default on the part of the defendants is well considered and correct.
39. In view of the above consideration it has been proved from record that it was the plaintiff who failed to perform his part of contract and therefore the lower appellate court has rightly refused to grant him the decree of specific performance of contract of lease. However, the lower appellate court, despite recording the finding that decree of specific performance of contract cannot be granted in favour of plaintiff and also after recording the finding that the contract between the parties was not terminated, had not directed the defendants to return the 1/4th amount deposited by plaintiff as auction money.
40. From the consideration of the judgments of both the courts below and the material on record, the first substantial question of law is decided holding that the suit of the plaintiff was not barred by time. The second substantial question of law is decided holding that the auction in favour of plaintiff was never canceled nor the amount was forfeited as concurrently held by both the courts below. Issue no. 3 is decided against the plaintiff holding that he was not always ready and willing to get the lease executed and its conduct did not prove that it did everything it could do to get lease deed executed in its favour from the defendants. Regarding substantial question of law no. 4, it is held that the lower appellate court has wrongly dismissed the suit of the plaintiff without decreeing it for the alternative relief of refund of the 1/4th auction money deposited by the plaintiff.
41. In view of the above this second appeal is partly allowed. The decree of the lower appellate court is modified and the defendant no. 2 is directed to refund the amount of Rs. 56,000/- deposited by the plaintiff, as 1/4th amount of auction money, with 9 percent interest from the date of deposit within two months from today.
42. This second appeal is partly allowed. The parties shall bear their own costs.
Order Date: 28.08.2018 Rohit