TMI Blog1964 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... s served with a notice (Ex. 2) from the Collector of Balasore prohibiting it from enclosing or possessing the disputed land as it was the subject-matter of a proceeding under Section 5 (1) of the Orissa Estates Abolition Act. The number and year of the proceeding was mentioned in the notice itself. The plaintiff was not aware prior to Ex. 1 that the disputed land was the subject-matter of such an enquiry. Plaintiff therefore came to Know that defendant 1 had not been recognised as a raiyat of the disputed land by the Anchal and her title was not free from doubt. After the service of the prohibitory notice defendant 1 could not execute a valid sale deed by 30th October 1956, as stipulated, and requested the plaintiff for extension of time. By a further agreement (Ext. 1/a) dated 1-11-1956, Incorporated in the body of Ex. 1, time was extended till the end of second week of January 1957. The contents of Ext. 1/a were to the following effect: That the said Samantani Sailarani Das (vendor) and the said M/s. G. P. and Co. (purchaser) for some overlooked circumstances not having been able to perform their part of the contract in time have hereby further agreed respectively to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decree the second appeal has been filed. 4. The teamed District Judge recorded the following findings: (a) Plaintiff was not aware of the pendency of the proceeding under Section 5(i) of the Orissa Estate Abolition Act, and the defendants did not disclose this fact to the plaintiff before execution of Ext. 1. The non-disclosure of the material defect in the seller's title to the property vitiated the contract and the plaintiff is entitled to refund of the earnest money. (b) Due to the pendency of the aforesaid proceeding defendant 1 could not complete the execution of the sale deed and could not deliver to the plaintiff an abstract, of her title to the property as provided in condition No. 2, of Ex. 1. (c) As defendant 1 failed to perform her part of the contract, the plaintiff repudiated the contract and asked for refund of earnest money. 5. The first conclusion of the learned District Judge is based upon misconception of law and cannot be supported. Section 55(1)(a), Transfer of Property Act, lays, down that in the absence of a contract to the contrary, the seller is bound to disclose to the buyer any material defect in the property or in the seller's title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff did not call upon defendant 1 to execute She sale-deed by any particular date failing which the agreement would stand rescinded. Doubtless in para 9 of the plaint the wording runs to the effect-- Whereas this plaintiff is ever ready to perform his part of contract. indicating present tense. But the plaint and Ex. 4, read as a whole, leave no room for doubt that by the registered notice (Ex. 4) the plaintiff rescinded the contract on account of the failure on the part of defendant No. 1 to produce rent receipts from the Anchal in proof of her recognition in the pending proceeding under Section 5(i). Reliance is placed on the statement of P. W. 1 to the effect-- We are ever ready to perform our part of the contract and ready to pay money during the period of contract and even two or three months after. Now I claim refund of the money and interest thereon. The comment is that the period of contract, according to the plaintiff, landed by the end of second week of January, 1957; and if the plaintiff was willing to perform Its spare of the contract even 2 or 3 months thereafter, the specific date, that the sale-deed would be executed by the second week of Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time, should be of the essence of the contract. Section 4 of the Transfer of Property Act prescribes that the chapters and sections of the T. P. Act, which relate to contract, shall be taken as parts of the Indian Contract Act. Section 55 of the Contract Act therefore has full application to the contract for sale of Immovable property. Law is well settled that notwithstanding that a specific date is mentioned for the completion of a con tract, one has not to look at the letter but at the sub stance of the agreement in order to ascertain the real intention of the parties, that is, whether, in substance, the parties intended that the execution should take place within a reasonable time. The dictum that the letter of the contract is to be disregarded and the sub-stance should be looked into may be excluded by any plainly expressed stipulation, The language of the stipulation must, however, show in unmistakabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of the essence of the contract would only take out plaintiff's case from the benefit of Exception No. 1. 9. The plaintiff-Company can, however, take resort to Exceptions (ii) and (iii), and on the strength of the registered notice (Ex. 4) can make out a case that the character of the property and other circumstances were such that the Court would refuse to exercise its jurisdiction for granting relief of specific performance to the vendor, and accordingly the vendee is entitled to refund of the earnest money. There is no dispute that proceeding under Section 5 (i) of the Estate Abolition Act was pending even after the expiry of the second week of January, 1957. Section 5 (i) prescribes that where the Collector is satisfied, in respect of the settlement of lease of n land made or created at any time after the 1st day of January 1946, that such settlement or lease was made with the object of defeating any of the provisions of that Act, or obtaining higher compensation thereunder, he shall have power to make enquiries in respect of such settlement or lease, and may, after giving reasonable notice to the parties concerned to appear and to be heard, set aside any such settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h interest thereon, to his costs of the suit and to a lien for such deposit, interest and costs on the interest of the vendor or lessor in the property to be sold or let. The fact that in both the sections reference is made to the specific performance or the institution of a suit by the vendor, does not affect the principle on the basis of which the vendee is entitled to refund of earnest money. The same principle is to be found in Section 55(6)(a) of the Transfer of Property Act. It lays down that in the absence of any contract, the buyer is entitled to, when he properly declines to accept the delivery, also for the earnest (if any) land for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. This suit is clearly to obtain a decree for refund of earnest money on the basis of rescission of the contract. The position is indisputable that defendant 1 was not in a position to give to the plaintiff a title free from reasonable doubt until 4-11-60. Even though time was not of the essences of the contract, the plaintiff was entitled to repudiate the contract, decline delivery of possession and ask for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w under Section 5 (i). The doubt so created was not merely a frivolous or idle one but which a Court of law can regard as serious and rational. In such circumstances, the court is not to exercise its jurisdiction to force the purchase on the unwilling purchaser. 11. The conclusion resulting from the aforesaid discussions may be summarised as that though time was not of the essence of the contract, the character of the property, which constituted the subject of the contract, was such that the Court would not exercise its jurisdiction to allow specific performance by compelling the plaintiff to purchase such a property, and the decree for specific performance is likely to result in injustice. As the Court would not compel the plaintiff to purchase such a property, the relief for refund of earnest money must be decreed. Mr. Patnaik's argument is bereft of clear analysis inasmuch as it concentrates on the sole factor that time was not of the essence of the contract. I would accordingly, confirm the ultimate conclusion of the learned District Judge though he was not alive to the considerations discussed above. 12. In the result the appeal fails and is dismissed with costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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