N. Kumar, J.@mdashThis is a defendants'' appeal challenging the judgment, and decree of the trial Court which has granted a decree for specific performance of the agreement of sale.
2. For the purpose of convenience, the parties are referred to as they are referred to in the original suit.
3. The subject matter of the suit is a site and building thereon bearing CITB No. 337 and corporation No. 337/17 situated on 37th ''B'' Cross. V Block, Jayanagar. Old Corporation Division No. 37. New Division No. 60, Bangalore - 560 011 measuring East to West 40'' and North to South 60'' which is more particularly described in the schedule to the plaint and hereinafter referred to as the schedule property.
4. The case of the plaintiff is that, the first defendant -I). Keshava Rao entered into an agreement of sale with the plaintiff in respect of the schedule property for a consideration of Rs. 24.00.000/--on 16.4.1994. He agreed to put the plaintiff in vacant possession of the schedule property. His three sons namely, the second defendant -- D. Sheshadri, third defendant -D.K. Lakshminarayana and the fifth defendant - B.K. Srinivasa Murthy witnessed the said agreement of sale.
5. The first defendant asserted that the schedule property was the self acquired property and no other person had got any claim over the same. He also stated that his sorts had also contributed monies towards the acquisition of the schedule property and the sale deed would be executed by him and his 6 sons It is also mentioned in the agreement of sale that all his sons would sign the agreement. The first defendant represented to the plaintiff that there were no differences between himself and his 6 sons. All his 6 sons would join him in the execution of the sale deed. Plaintiff may be satisfied with the signatures of his sons who were immediately available on the date the agreement was entered into. The plaintiff had no reasons to distrust the first defendant who was an elderly person and also the Kartha of his family those circumstances, the plaintiff parted with a substantial advance of Rs.5,00,000/- in favour of the first defendant. Time within which the transaction is to be completed is set out in the agreement. On the date of registration of the sale deed or sale deeds, the first defendant who was residing along with some of his sons and their families in the schedule property would deliver vacant possession of the same at the time of execution of the sale deed.
6. The plaintiff was in close touch with the first-defendant and his sons after he entered into the agreement of sale. He believed that the transaction will go through smoothly. The same did not go through as differences had cropped up between defendants 1 to 6 on one hand and 7th defendant on the other hand. The differences was over the division of not only the immovable assets but also the movables and the several businesses that were being run by the joint family. It is paradoxical that: 7th defendant who had taken a prominent part in the sale negotiations and who was also residing in a portion of the schedule property was using the very agreement his father and his other brothers had entered into with the plaintiff for the sale of the schedule property as lever to compel them for a division of all the family assets. He tiled a partition suit in O.S. Ho. 5309/1994 on 8.9.1994 seeking 1/7th share in the schedule property and l/7th share in the capital, stock in-trade and profits of the other properties described in Schedules B and C to the plaint in the said suit.
7. Defendants 1 to 6 were holding out assurances to the plaintiff that the differences that had cropped up between them and the 7th defendant would be resolved fairly soon and all of them would together execute the sale deed and put the plaintiff in vacant possession of the schedule properly. However, this proved to be a false belief on the plaintiffs part. On 12.5.1995 the plaintiff called upon the first defendant to execute the sale deeds in terms of the agreement of sale dated 16.4.1994 failing which he would be compelled to institute appropriate legal proceedings. The first defendant sent a reply dated 7.6.1995 stating that the defendants 1 to 6 are ready and willing to execute the sale deed as agreed to but it was the 7th defendant: who had filed a suit, seeking his 1/7th share in the schedule property and other properties and that the plaintiff should bear with him for a while longer before the matter could be finally concluded. In continuation of the reply dated 7.6.1995 the first defendant addressed yet another reply through his counsel stating that he and defendants 2 to 5 were in the process of getting a decree drawn up in the suit filed by the 7th defendant. Except the 7th defendant., others were ready and willing to execute the sale deed. To say the very least, the first defendant was introducing a novation to the existing contract between himself and the plaintiff. Curiously the third defendant sought to act independently of his father and sent a notice to the plaintiff dated 10.7.1995. Plaintiff also sent a reply to the defendants on 14.7.1995 stating that the offer contained therein was not in consonance with the recitals in the agreement of sale.
8. In the plaint filed by the 7th defendant and in the written statement by defendants 1 to 6 in the said suit there was acknowledgement on their part that they had entered into an agreement of sale in respect of the schedule property with the plaintiff herein and that they had also received a substantial sum of Rs.5,00,000/- from him. The suit itself was sought, to be sealed on this very issue of the agreement of sale which had come into existence on 16.4.1994. It is most unfortunate that what was meant to be a straight forward transaction to be completed by the first defendant and his sons in as short a time as possible should have resulted in needless complications created by some of the sons of the first defendant. Notwithstanding the exchange of notices the plaintiff continued to bind himself and through his friends who were in the know of the suit transactions, meet with the first defendant and some of his sons including the 7th defendant in the hope and belief that matters could be sorted out and wasteful litigation avoided. The plaintiff on the date he entered into the agreement of sale and on all subsequent dates right up to the date of filing of this suit, was and is ready and willing to perform his part of the contract in fact there was great urgency for him to acquire the schedule properly to take up residence therein, even as he and the members of his family were residing in a rented house. As a last, resort the plaintiff through his counsel got served a notice on the first defendant dated 13.1.1997 calling upon the first defendant and his sons to execute the sale deed and get it registered. No reply was sent to the legal notice. The defendants are not honest, In fact having received a large sum of Rs.5,00,000/- nearly 3 years ago with oblique motives delaying the execution of the sale deeds hoping that the rights the plaintiff has secured under the suit document may get defeated by the laws of limitation. The defendants including the 7th defendant are legally bound to effect a sale of the schedule property. Even conceding that the 7th defendant has secured a decree in his suit delineating his 1/7th share, it only means that he is entitled to his 1/7th share in Rs.24.00,000/- to be paid to him at the time of registration of the sale deeds. The plaintiff is more than ready and willing to do so. Therefore, he filed the suit for specific performance of the agreement of sale.
9. After service of summons, defendants 2, 3 and 5 filed a common written statement. They admitted the execution of the agreement of sale, consideration agreed upon at Rs.24,00,000/-. They admitted that the agreement, is witnessed by the three sons of the first defendant. They denied that the schedule property absolutely belongs to the first defendant and that his children have no right over the same. It is only alter due deliberations the plaintiff wanted the agreement to have in the way suitable to him. The very agreement was brought about as the instance of the 7th defendant. Sri Nagaraj. The first, defendant vacated the portion in his occupation after receiving an advance of Rs.5,00,000/-and all other portions except the one in occupation of the 7th defendant were kept vacant to be delivered to the plaintiff after due execution of the sale deed. But at the last moment the 7th defendant refused to join the other defendants in the agreement and he expressed has intention not to sell the suit schedule property. It is on account of this situation these defendants could not execute the sale deed in respect of the entire schedule property by receiving the balance of sale consideration for which the plaintiff himself was responsible. 7th defendant filed a suit against these defendants in O.S. No. 5309/1994 for partition and separate possession of his 1/7th share. These defendants did not dispute his 1/7th share. The Court passed a preliminary decree declaring 1/7th share. 7th defendant preferred an appeal in RFA No. 600/1995. In the meanwhile the plaintiff issued a legal notice requesting these defendants to receive the balance of sale consideration and execute the necessary sale deed and place him in possession of the schedule property. Though he was very particular in watching the proceeding and never showed his willingness and readiness to perform his part of the obligation, he was blissfully watching the proceedings initiated by the 7th defendant against these defendants. He was never ready and willing to purchase the same share of the defendants. Thus, it clearly manifests that the allegations made by the plaintiff that he was ready and willing to purchase the schedule property are absolutely false and meant only to overcome his, dishonest intention. The plaintiff never moved his little finger to get the transaction completed. There are no bona fide on the part of the plaintiff in having waited all these days watching the proceedings, only when the time was drawing to a close the plaintiff has come forward with false and frivolous allegations. The plaintiff being only an agreement holder and having parted with a paltry sum of Rs.5,00,000/- has no enforceable right against these defendants. He has not acquired substantial rights and the suit is liable, to be dismissed.
10. In the notices exchanged between the parties it is submitted that, without prejudice to the rights of these defendants an offer was made to the plaintiff to purchase their shares after the preliminary decree was passed. But as already submitted above the plaintiff never wanted to purchase as seen from the exchange of notices. These novices were exchanged as long back as in July 1995 and the plaintiffs have filed this suit only when the time was about to run about. This attitude and device adopted by the plaintiff cuts at the root of right of the plaintiff and his allegation that he was ready and willing to perform his part old he obligation tails to the ground.
11. Added to this as stated above the Hon''ble High Court has passed an order in RFA No. 600/1995 that, the schedule property should not be alienated pending disposal of the suit. The plaintiff is well aware of the efforts made by these defendants. Without prejudice to the rights of these defendants as stated above these defendants are prepared to sell their shares to the plaintiff at the prevailing market rate. This is only a concession made by these defendants as the plaintiff has lost his rights and these defendants are not liable to sell their shares to the plaintiff and plaintiff alone. The plaintiff is very particular. He may move the High Court, in the above said RFA and get whatever relief he may be entitled to and therefore they prayed for dismissal of the suit.
12. Defendants I, 4 and 6 filed a memo adopting the written statement filed by defendants 2. 3 and 5. 7th defendant has not filed any written statement.
13. On the aforesaid pleadings, the trial Court framed the following three issues :
1. Whether the plaintiff proves that he has been ever ready and willing to perform his par of the contract?
2. Whether the plaintiff proves that he is entitled for the specific performance of the agreement of sale?
3 What decree or order?
14. The plaintiff in order to substantiate his claim examined himself as PW1 and produced 9 documents which are marked as Exs. P1 to P9. On behalf of the defendants, 5th defendant - B.K. Srinivasa Murthy was examined as DW1. He has produced 2 documents which are marked as Exs. D1 and D2.
15. The trial Court on appreciation of the aforesaid oral and documentary evidence on record held that the plaintiff was ready and willing to perform his part of the contract. He is not at fault and therefore he is entitled to a decree for specific performance of the agreement of sale. However, it held the plaintiff is not entitled to any damages or interest. It directed the plaintiff to deposit Rs. 19,00,000/- within 15 days from the date of the judgment and directed defendants 1 to 6 to execute a sale deed within 20 days from the date of such deposit failing which the sale deed would be executed in accordance with law by the Court. Aggrieved by the said judgment, and decree of the trial Court, the defendants 1 and 5 have preferred this appeal.
16. Learned counsel for the appellant-defendants 1 and 5 assailing the impugned judgment and decree contended that the suit schedule property belongs to the defendants who have equal share. Admittedly defendants 4, 6 and 7 have not executed the agreement of sale The trial Court without looking into the agreement of sale has decreed the suit of the plaintiff in respect of the shares of defendants 4 and 6 also and therefore the judgment and decree passed by the trial Court on the face of it is illegal. He also contended the defendants were always ready and willing to perform their part of the contract. They have not disputed the agreement of sale. They have not denied the receipt of Rs.5,00.000/- under the agreement of sale. But the terms of the agreement make it clear the plaintiff had to pay another Rs.8,00.000/- within a month from the date of the agreement of sale and take the sale deed in respect of the ground floor portion, The balance amount to be paid within 3 months and the possession of the property is to be handed over at the time of execution of the sale deed. The plaintiff admittedly did not make payment in respect of the first sale deed in a sum of Rs.8.00,000/- and did not take any sale deed in respect of the ground floor portion. On the contrary, the 7th defendant: who was instrumental In bringing about this property filed a suit against the other defendants and obtained an order of injunction restraining them from alienating 1/7th share belonging to him. In those circumstances, no sale deed in respect of the entire property could have been executed by the defendants as other defendants would not have represented this 7th defendant as well as defendants 4 and 6. The exchange of notices between the parties show the defendants are consistent in then stand. They were always ready and willing to perform their part of the contract. In fact though a preliminary decree was passed they called upon the plaintiff to take 6/7th share and get the sale deed registered. The plaintiff accuses them of trying to novation and he was not willing to take 6/7th share and get the sale deed registered. It is only when the limitation was Hearing to an end he realised that the defendants are unable to execute a sale deed in respect of the schedule property. For the first, time he made an offer to take the sale deed in respect of 6/7th share. That is in the year 1997, 3 years after the execution of the agreement of sale, Therefore, it was unjustified on the part of the plaintiff to have demanded a sale deed in respect of 6/7th share by paying (he consideration agreed upon 3 years back. Therefore, when a suit was filed even in the written statement the defendants contended they are willing to sell the property if the plaintiff is willing to pay the market price. The plaintiff was not willing to pay the market price. In those circumstances, the claim of the plaintiff could not have been entertained by the trial Court. Firstly, plaintiff was not ready and willing to perform his part of the contract, secondly the plaintiffs suit for specific performance is hit by latches and delay and at any rate with the steep increase in the value of the urban property when the parties agreed to conclude the transaction in respect of one portion in one month and the remaining portion in three months, the plaintiff could not have insisted the very same consideration after three months for completing the sale transaction. These aspects have not been properly appreciated by the trial Court. It proceeds on the assumption that in respect of an immovable property time is not the essence of the contract, and without noticing that the plaintiff was not ready and willing to perform his part of the contract has granted a decree for specific performance which is illegal and requires to be set aside.
17. Per contra, the learned counsel for the plaintiff-respondent submitted that the agreement of sale is not in dispute, the payment of consideration of Rs.5.00,000/- is not in dispute. Plaintiff was always willing to perform his part of the contract. It is because of the differences they were not able to execute the sale deed in respect of the entire property. 7th defendant filed a suit for partition and separate possession of his 1/7th share and obtained an interim order preventing the other respondents from executing the sale deed. Even after a preliminary decree was passed, the portion to which he was entitled to has to be ascertained only in the final decree proceedings. The plaintiff who was in a rented premises wanted the premises for his occupation, unless possession was given to him he was not prepared to take the sale deed and in view of the litigation between the parties they were unable to give possession and in the end of the day when he agreed to purchase 6/7th share they did not come forward. At any rate no blame could be put on the plaintiff for not completing the transaction. Time is not the essence of the contract. Plaintiff was ready and willing to perform the contract at all relevant point of time. He was not at fault. He had come to the Court with clean hands. In those circumstances, the trial Court was justified in decreeing the suit for specific performance. Therefore, no case for interference with the well considered order by the trial Court is made out.
18. in the light of the aforesaid facts and the rival contentions, the points that arise for our consideration in this appeal are as under : -
1) Whether the finding of the trial Court that the plaintiff was ready and willing to perform his part of the contract: is vitiated as contended by the defendants?
2) Whether the Court below was justified in granting a decree for specific performance of the suit agreement?
3) Whether the trial Court has properly exercised its discretion in granting the decree for specific performance?
Point No.1
19. The Agreement of sale dated 16.4.1994 entered into between the parties is not in dispute. The total consideration agreed upon was Rs.24.00 lakhs. A sum of Rs.5.00 lakhs was paid on the date of Agreement of sale, which is also not in dispute. The Agreement provides that the parties agree to complete the sale in respect of ground floor portion within one month from the date of the agreement. At the time of execution of the sale deed in respect of ground floor portion, the vendor shall adjust total sum of Rs. 4.00 lakhs, out of Rs.5.00 lakhs paid as advance towards part consideration of the sale in respect, of ground floor and out of the half total consideration payable in respect of ground floor portion, i.e., the plaintiff shall pay remaining Rs. 8.00 lakhs at the time of execution of the sale deed. In respect of sale deed to be executed for the first floor, that should be done within three months horn the date of the Agreement and on payment of Rs. 11.00 lakhs. It is averred in the plaint that what was meant to be a straight, forward transaction to be completed by the first defendant and his sons in a short time as possible, should have resulted in needless complications created by some of the sons of the first defendant. Again in para 6 of the plaint, it is alleged that on the day plaintiff entered into the Agreement of sale and on all subsequent, dates right up to the date of filing of the suit, he was ready end willing to perform, his part, of the contract and in fact there was great urgency for him to acquire the suit property to take up residence therein, even as he and the members of his family members were residing in a rented house. Thus, averments in the plaint make it clear that time was the essence of the contract which has to he completed in short time. There was great urgency. Therefore what he agreed under the Agreement, of sale has to be understood in the context of the time within which the sale deed is to be executed i.e. half of the sale consideration to be paid within one month, remaining half should be paid in three months and two sale deeds to be executed, one In respect, of ground floor and the other in respect of the first floor. In this context, it is also necessary to notice that the plaintiff was aware apart from first defendant father, his six sons also had interest in the suit property. In fact, it is the 7th defendant who brought about the Agreement of sale. In the Agreement entered into between the parties, only defendant Nos. 1,2,3 and 5 have affixed their signatures, defendant Nos. 4, 6 and 7 have not affixed their signatures. Therefore, three sharers out of seven sharers are not parties to the Agreement of sale. No-doubt, the recital in the Agreement makes it clear that the first defendant father undertook responsibility of getting signatures at any rate to see that they execute the sale deed in favour of the plaintiff. In the light, of these undisputed facts, the plaintiff ought to have paid Rs.8.00 lakhs on or before 16.5.1995. Admittedly, the said amount was not paid. The reason is the other three sons did not sign to the Agreement, of sale as consenting witnesses. The 7th defendant filed a suit in O.S.R.No.5309/ 1994 on 8.9.1.994. Therefore, in between 18.4.1994 and 16.5.1995, one month prescribed for executing the sale deed in respect of the ground floor portion there was no legal impediment. In fact, the plaintiff has not called upon the defendant to execute the sale deed as agreed to under the terms of the agreement, in respect of the ground floor portion. Except saying that the other sons did not affix the signatures as consenting witnesses, there are no other reasons for not completing the sale transaction in respect of the ground floor. The first legal notice issued by the plaintiff to the defendant was on 12.5.1995, marked as Ex-P2. In other words, the legal notice is issued nearly one year, one month after the Agreement, of sale, at any rate, eight months after the period stipulated for completing the sale transaction. In the said legal notice, the plaintiff called upon defendant. No. 1 to execute the sale deed within fifteen days from the date of receipt of the legal notice, failing which, he would he constrained to file a suit for specific performance. Therefore, no legal notice was issued to other children of defendant No. 1 atleast to those who have signed the Agreement, of sale. Said legal notice was replied to by the first defendant as per Ex-P3 dated June 7th, 1995. In the said reply, it was clearly set out that 7th defendant, who was instrumental in bringing out the sale of the property in question in favour of the plaintiff backed out at the time of Agreement of sale which is well within the knowledge of the plaintiff. He asserted that he and his five sons were ready and willing to perform their obligation under the contract. It is also asserted that each one of them vacated the different portions, which were in their occupation and they have got it vacated to hand over the same to the plaintiff. They also resisted to the suit filed by the 7th defendant, and promised that, they would sort out the said matter and approach him and perform their part of the obligation. Therefore, it is clear from the legal notice that the defendants were ready and willing to perform their part of the obligation. Further, first defendant sent one more additional reply as per Ex-P4 on 14th July 1995 bringing to the notice of the plaintiff that the suit filed by Nagaraj has been decreed and therefore, the plaintiff can proceed with the completion of the sale transaction, so that he would get. 6/7th share in the property and he can put the decree in execution and take possession of the property also. They again reiterated Unit they are ready and willing to perform their part of the obligation, they would execute the sale deed and they gave 15 days time to the plaintiff to perform his obligation. Third defendant wrote a letter to the plaintiff which is marked as Ex-P5 which is dated 10th duly 1995 pointing out the events which were transpired till then and it was pointed to him that as he did not come forward to purchase the property by paying the balance sale consideration and get the sale deed executed within the time stipulated, now he has no more interest in the transaction and he refused to sell the suit property which was duly served. The plaintiff sent a reply as per Ex-P6 through his counsel insisting on consent letter from Nagaraj for sale of the property and that he has vacated the property in his occupation, so that they can complete the sale transaction. Thereafter, the plaintiff sent one more legal notice as per Ex-P7, again calling upon the defendants to perform their part of the contract, failing which, they would approach the competent Court of law.
20. In other words, defendants have been ready and willing to perform their part of the contract, and demanded the plaintiff for performance of the contract. No replies were sent to the said letters. However, on 13.1.1997, as per Ex-P8, one more legal notice was issued to the first defendant calling upon him to execute the sale deed in respect of 6/7th share in the property i.e., it is alter three years from the date of the Agreement. The plaintiff is walling to take the sale deed in respect of 6/7th share and till such time, he was not willing to execute sale deed in respect of 6/7th share and he was insisting sale deed being executed in respect of the entire property. In other words, plaintiff was not ready and willing to perform his part of the contract by paying balance of sale consideration and fake sale deed in respect of 6/7th share, though the defendants were willing. Unfortunately, the Trial Court has not properly appreciated these undisputed facts as evidenced by documents and came to a conclusion that the plaintiff was ready and willing to perform his part of the contract. When the plaintiff did not take the signatures of three other sharers, for him to insist that all sharers to execute the sale deed is unreasonable. When the 7th defendant filed a suit for partition and when he did not affix the signature to the Agreement of sale, there is nothing others could have done. On the part of the others they were ready and willing to execute sale deed in respect of 6/7th share. The plaintiff was not ready to pay the sale consideration as agreed upon. Sale deed is to be executed within one month in respect of the ground floor and within three months in respect of the first floor. This conduct clearly demonstrates that though in the legal notice so issued, the plaintiff has expressed his readiness and willingness, by his conduct, he has shown his un-willingness to complete the sale transaction.
21. Learned counsel for the respondent-plaintiff contended that, the plaintiff was staying in a rented premise, he wanted vacant possession of the property urgently. In fact, he has sold one property and was ready with the sale consideration. If he was not getting vacant possession of the entire property and sale deed in respect, of the entire property, it is of no use to him. He cannot be compelled to take sale deed in respect of 6/7th share. When the. 7th defendant was in occupation of a portion of the property and when he filed a suit, obtained an interim order to protect, his possession, the plaintiff was not sure which portion he would get when the sale transaction is complete. In respect of 6/7th share, he had paid substantial amount of 5.00 lakhs, he was ready with the balance sale consideration and take the sale deed. Therefore, it cannot, be said that the plaintiff was not ready and willing to perform his part, of the contract.
22. Though the argument of the learned counsel tor the respondent plaintiff looks attractive, if the plaintiff has come forward to purchase the property i.e. 6/7th share, it was only on 18.1.1997. In other words, from 16.4.1994 till 13.1.1997, the plaintiff was not ready and willing to take 6/7th share. When the plaintiff had not, taken the signatures of three sharers, his insistence, he would get entire property or 6/7th share is not a reasonable demand. In law, the Agreement which he was holding was only 4/7th share, there was no agreement, in respect of remaining 3/7th share. These aspects has been completely missed out by the Trial Court and it has committed serious error in holding that the plaintiff was ready and willing to perform his part of the contract.
Point Nos. 2 and 3 :-
23. It was contended on behalf of the plaintiff that, mere rise in the property value cannot be a ground to refuse specific performance, therefore, the Trial Court has rightly granted the decree of specific performance and in respect of that contention, the learned counsel for the plaintiff relies (sic), the following decisions:-
1. "The Apex Court : in the case of P.S. Ranakrishna Reddy Vs M. K. Bhaggalakshmi and Another reported in 2007 AIR SCW 1383 held that rise in the price of an immovable property by itself is not a ground for refusal to enforce a lawful agreement of sate.
2. The Apex Court, in the case of Mst. Sugani Vs. Rameshwar Das & Another reported in AIR 2006 SCW 2606 held relying on Lord Campbell in Cork Vs. Ambergate etc. and Railway Co. (1851) 117 ER 1229 that in common sense the meaning of such an averment of readiness and willingness must be that the non-completion of the contract was not the fault of the plaintiffs and that they were disposed and able to complete it had it not been renounced by the defendant. The baste 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 he denied the relief Section 16(3) of the Act mandates the plaintiff to aver in the plaint and establish as the fact by evidence that he was always been ready and willing to perform his part of the contract.
24. Therefore, applying the law as stated above to the facts of the case, when the plaintiff knowing fully well that the schedule property belongs to seven persons and entered into an Agreement to purchase the property and only four sharers affixed the signatures to the Agreement, he cannot, postpone the completion of the sale on the ground that other sharers either have not signed the Agreement of sale or on the other hand that they are not willing to execute the sale, his insistence that other three sharers should execute the sale-deed and deliver the possession of the property in their possession, in the absence of any Agreement of sale executed by them, cannot be held to be a conduct which has been blemishless throughout. He cannot hold the other defendants responsible that those three persons are not signing the Agreement, notwithstanding the same the correspondence between the parties was the other two sharers who have signed, they were ready and willing to execute the sale deed, provided, the plaintiff places the sale deed and lake the sale deed and they were ready to hand over the possession of the property, which were in their possession. It is the plaintiff who has backed out. It is not: a case where in order to frustrate the contract, the other sharers have set one sharer to file a suit and that was given as an exeuse for not completing the contract. On the contrary, it is the 7th defendant, who filed the suit, who brought, upon the agreement. If the plaintiff did insist the signature of the 7th defendant who brought, about the agreement, he cannot find fault, with the first defendant in not getting the signature and 7th defendant having filed a suit and getting an interim order. Therefore, if is not mere case of refusal on the part of the defendants to execute the sale deed on the ground of rise in the price. It is clear case where the plaintiff was not ready and willing to fake sale deed in terms of the agreement, and was insisting on something more than what was stipulated in the Agreement viz., execution of the sale deed by three sharers who did not subscribe their signatures on the Agreement of sale.
25. In fact., learned counsel for the defendants-appellants relies upon the decision of the Constitution Bench of the Apex Court in the case of
In the case of urban properties in India, it is well-human that their prices have been going up sharply over the last few decades particularly after 1973....We cannot be oblivious to the reality and the reality is constant, and continuous rise in the values of urban properties-fuelled by large scale migration of people from rural areas to urban centres and by inflation.
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 tunes 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.
(Emphasis supplied)
Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975. in view of the changed circuanstances arising from inflation and steep increase in prices We do not propose to undertake that exercise in this case, nor referring the matter to larger Bench as we have held, on facts in this case that time is the essence of the contract even with reference to the principles in Chand. Rani and other cases. Be that as it may.
26. The Apex Court in the case of
(i) "Courts, while exercising discretion in suits for specific, performance, should bear in mind that when the parties prescribe a time /period, for taking certain steps or for completion of the transaction, that must have some significance and, therefore, time/period, prescribed cannot he ignored.
(ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was ready and willing'' to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed, within the period of limitation by ignoring the time-limits stipulated in the agreement Courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended, to assist purchasers in special cases, as for example, where the major part, of the consideration has been paid to the vendor and possession has been delivered, in part, performance, where equity shifts in favour of the purchaser.
27. Following the aforesaid judgments, the Apex Court in the ease
The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market value of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed, to be nor material, or at alt events considered as merely indicating the reasonable period, within which contract should be performed. The assumption was that grant, of specific, performance would not prejudice the vendor-defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration, la say that properties in cities, worth a lakh or so in or about 1975 to 1980. may cost a crore or more now.
28. In view of the aforesaid settled position, where the Supreme Court has deviated from the earlier view because of drastic changes which has occurred in the last part of 20th century and first, quarter of 21st century, where because of the galloping inflation, prices of all immovable properties have increased steeply by leaps and bounds, where real estate is no longer stable and steady, where the property values are inereasing every month if not everyday, it cannot, be said that the Courts can take notice of enormous increase in the value of the property between the date of agreement and the date they are expected to enforce these agreements. Viewed from that angle, the approach of the Trial Court is illegal. In fact the learned counsel for the respondents plaintiff after instructions from his client made a submission that he is willing to pay double the amount and thereafter he filed a memo agreeing to pay three times the prevailing market rate as prescribed by the Registering Authority. It only shows the factum of market value of the property especially in a city like Bangalore where it is galloping by leaps and bounds is an admitted fact. We could have considered said submission provided defendants had put forth a stand which is malafide with an intention of avoiding the contractual obligation. On the contrary, at every stage, notwithstanding the fact that the plaintiff did not perform his part, of the obligation of paying the amount, within the stipulated period, they were ready and willing to perform their part of the contract and executed the sale deed. In fact their fairness is reflected in the written statement, where there is categorical admission, that even now they are willing to execute the sale deed, provided the plaintiff pays the market value on the date of the written statement. Their interest is understandable. They have entered into Agreement of sale to receive the market value as on the date of the Agreement. For reasons beyond, their control, for no fault, of theirs, though they were willing to execute the sale deed, transaction could not be completed. It is only after three years, plaintiff has come forward to take the property as is and where is basis condition. But, in three years'' period, the value of the property has gone up by leaps and bounds. In those circumstances, it cannot be said that defendants are at fault. It cannot be said that they were not ready and willing to perform their part of contract, it is the plaintiff who was not ready to perform, he was not willing to pay the market, price on the date he was willing to fake the property as is and where is basis condition. He was ready to pay the agreed price even as prevailing on the date of the suit when the defendant made an offer and therefore, it is too late in the day for the plaintiff now to contend before this Court that he will pay three times the value prescribed by the Government by virtue of the notification, which is basis for the registration. When the plaintiff is not ready and willing to perform his part of the contract, he is not entitled to discretionary and equitable relief of Specific performance. It is only when he was not at fault, he was ready and willing to perform his part of contract he is entitled to such relief. In the mean-while, years have lapsed and the property values have increased steeply by leaps and bounds and the question of Court granting decree of Specific performance subject to the condition, the plaintiff pays the market value, such a situation has not arisen in this case and therefore, the question of considering that submission would not arise. Unfortunately, the trial Court has gone into the ease in a copy book style without properly appreciating the facts and the conduct of the parties. Though the Trial Court has set out number of judgments, it has not tried to follow the principles laid down in those judgments. We do not see any discussion on the law laid down by the various Courts including the Apex Court in the Judgment. In that view of the matter, the judgment of the Trial Court suffers from serious legal infirmity and it cannot, be sustained. Hence, we pass the following order-
(a) Appeal is allowed.
(b) The judgment and decree dated 10.8.2006 passed by the Trial Court is hereby set-aside.
(c) The suit of the plaintiff for specific performance is dismissed.
(d) However, the defendants shall refund a sum of Rs : 5.00 lakhs received from the plaintiff with interest at 15% from the date of payment of Rs. 5.00 lakhs by the plaintiff till the date of payment to the plaintiff. Said amount shall be a charge on the schedule property. Parties to bear their costs.
The plaintiff has deposited Rs. 19.00 lakhs in terms of the decree passed by the trial Court. It is submitted that the said amount is now in deposit, in a Nationalised Bank earning interest. The Trial Court shall forthwith order for return of the said amount with interest, which has accrued over the period, to the plaintiff.
