TMI Blog2009 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... inafter 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 ₹ 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 ₹ 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 ₹ 1,75,000/- and a sum of ₹ 1,50,000/- was paid as advance, the receipt of which was duly acknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion 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 ₹ 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 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiff 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 consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussion :- 16. The execution of the agreement dated 26.09.1990 as per Ex.A-1 is not in dispute. Similarly, the subsequent payment of ₹ 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 ₹ 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 ₹ 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 ₹ 10,000/- was paid by the plaintiff on 15.07.1990. Plaintiff has also obtained a further ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff 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. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odgment 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 simult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 tel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 eff ..... 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