TMI Blog1997 (2) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... period of six months from this date and in this regard from and out of the aforesaid sale amount a portion of the same being ₹ 5,000 has been obtained this day as advance amount with interest, by the first party from the second party. Further it had been stipulated that within the aforesaid period of six months the second party should purchase the stamp papers at his own expense and after adjusting the aforesaid advance amount should pay the balance amount either in person or in the presence of the Registrar and the first party should affix his signature and execute the same in favour of the second party; that further prior to Registration of the aforesaid sale deed, the first party should vacate and deliver possession in favour of the second party together with the keys and if the second party fails to complete the purchase as aforesaid the advance amount without interest and paid first party should not be demanded to be returned and likewise, if the second party were to be ready to complete the purchase and the first party fails to execute the aforesaid sale, the first party will be liable to pay the aforesaid advance amount of ₹ 5,000 together with compensation of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance holding that the plaintiff was ready but not willing to perform his part of the contract but directed that the earnest money be refunded to him with interest. The Trial Court rejected the plaintiffs case, supported only by oral evidence, that during the period December 15, 1978 to July 11, 1981, the plaintiff has been requesting the defendants to execute the sale deed and that the defendants have been seeking time representing that the tenant had not vacated. The Trial Court also found that after the suit agreement, the plaintiff has purchased two other properties, in the years 1979 and 1981, for ₹ 35,000 and Rs, 30,000 respectively and that he had no ready money to pay the balance consideration under the suit agreement. On plaintiffs appeal, a Division Bench of the High Court reversed the judgment of the Trial Court. The High Court accepted the plaintiffs case that he has been asking the defendants for execution of the sale deed and that the defendants had been seeking time representing that the tenant has not vacated. The High Court affirmed the finding of the Trial Court that time was not the essence of the contract but reversed the Trial Court's finding wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e situations in which the court may refuse specific performance. Sub-section (3) of Sec-tion 20 says that the court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance . Section 21 sets out the circumstances in which the court may award compensation in lieu of or in addition to specific performance. Section 23 says that merely because an agreement mentions a particular sum payable by the defaulting party to the other, that shall not be a ground for refusing the specific performance. Section 55 of the Contract Act is in three parts. For our purpo.ses, it is enough to notice the first two parts, which reads : '55. Effect of failure to perform at fixed time, in contract in which time is essential. - When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract or so much of as it has not been performed, becomes voidable at the option of the promisee, if the intention of the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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-limits 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*. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15th of June, 1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is v/hat was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2 1/2 years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11.7.1981, i.e., for a period of more than 21/ 2 years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendant's case that the values of the house property in Madurai town was rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and demand specific performance. 11. Sri Sivasubramanium cited the decision of the Madras High Court in Section V. Sankaraninga Nadar v. P.T.S. Ratnaswamy Nadar A.I.R. 1952 Mad. 389 holding that mere rise in prices is no ground for denying the specific performance. With g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain time-limits for taking steps by one or the other party, it must have some significance and that the said time-limits cannot be ignored altogether on the ground that time has not been made the essence of the contract [relating to immovable properties]. 12. Sri Sivasubramanium relied upon the decision of this Court in Satyanarayana v. Yellogi Rao [1965]2SCR221 , wherein it has been held: As Article 113 of the Limitation Act prescribes a period of 3 years from the dated fixed thereunder for specific performance of a contract, it follows that mere delay without more extending up to the said period cannot possibly be a reason for a court to exercise its discretion against giving a relief of specific performance. Nor can the scope of the discretion, after excluding the cases mentioned in Section 22 of the Specific Relief Act, be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no subsisting right or there will be a bar against the assertion. So, there must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract, the plaintiffs must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property. 15. Sri Sivasubramanium submitted that as on today, fourth appellant alone is fighting the litigation, that he has purchased the property after the decree of the Trial Court which means that he has consciously purchased litigation and that, therefore, there are no equities in his favour. Counsel submitted that as between the plaintiff and the fourth defendant, equities are in favour of the plaintiff. We are not impressed. The plaintiff has paid only a sum of ₹ 5,000/- in December, 1978 as against the consideration of ₹ 60,000/-. The Trial Court dismissed the suit for specific performance on 4.9.1982, while decreeing the refund of their earnest money. Defendant No.4 purchased the suit house on November 19, 1982 for a consideration of ₹ 90,000/-. May be, he knew he was purchasing litigation and probably it was for that reason that he may not have paid the full amount of the value. In any event, we cannot ignore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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