K.L. Manjunath, J.@mdashThe Appellants are challenging the legality and correctness of the judgment and decree passed by the Principal Civil Judge (Sr. Dn.), Mysore on 21.6.2003 in O.S. No. 351/1996.
2. The Appellants were Defendants in the suit. Respondent was the Plaintiff before the Trial Court. The suit was filed by the Plaintiff to enforce the agreements of sale dt 3.1.1991 and 29.9.1995 to direct the Defendants to execute the sale deed in respect of plaint schedule property or in the alternative if specific performance cannot be granted, direct the Defendants to pay a sum of Rs. 7,50,000/- with interest at 18% p.a. The Trial Court has decreed the suit directing the Defendants to execute the sale deeds within three months failing which the Plaintiff is at liberty to get the sale deed registered and execute through the Court. This judgment and decree is called in question in this appeal.
3. We have heard the learned Counsel for the Appellants and the learned Senior Counsel, Sri. Yoganarasimha for the Respondent
4. The facts leading to this case are as hereunder:
The Defendants are brothers and are the children of one K.L. Lakshmipathy. They are the owners of a vacant land situated in the heart of Mysore City in Bannimantap, where Daserra procession leads from Mysore Palace to Bannimantap. The property bearing site No. 7/D situated at Bannimantap ''A'' layout, Mandi Mohalla, Mysore, bounded on east by road, west by road, north by road, south by site No. 9 measuring east to west 235'' + 200''/2 and north to south 150 ft.
According to the plaint averments, the Defendants agreed to sell the property for a sum of Rs. 6,50,000/-. On the ground that 1st Defendant -K.L. Sathyaprakash was in abroad they decided to sell the schedule property for their dire needs. The Plaintiff is a company dealing with the finance agreed to purchase the same for its business and intended to diversify its business activities. Accordingly on behalf of the 1st Defendant, the 2nd Defendant as a power of attorney holder entered into an agreement to sell the plaint schedule property on 3-1-1991 agreeing to sell the same for a total consideration of Rs. 6,50,000/-. A sum of Rs. 50,001/- was paid to the Defendants by means of pay order drawn on Corporation Bank. It was agreed that the balance sale consideration of Rs. 6,00,000/- shall be payable by the Plaintiff at the time of registration of the sale deed before the Sub-Registrar. Since the plaint schedule property was a vacant land situated within the Urban Land (Ceiling and Regulations) Act, there was ban on sale of an urban property and it could be sold only after obtaining permission from the Competent Authority as per the provisions of Karnataka Urban Land (Ceiling and Regulation) Act, 1976. The Defendants agreed to obtain permission accordingly 3 months time was stipulated to obtain the permission and to sell the same. The sale was subject to obtaining the permission under the provisions of Karnataka Urban Land (Ceiling and Regulations Act, 1976. It is the further case of the Plaintiff though an application was filed for grant of permission, the Govt. refused to grant permission to the Defendants to alienate the property.
In the circumstances another agreement dt.29.9.1995 was entered into between the parties extending the period to complete the transaction by one more year from 29.9.1995 and it was agreed that the Defendants should co-operate with the Plaintiff to construct a building of minimum 6 squares and they agreed to sell the property along with the building to be constructed by the Plaintiff within a period of one year. Based on the same, the Plaintiff obtained licence and plan from the Corporation to construct a building and also engaged the Building Contractor on 19.9.1996 and the Contractor who had undertaken the work of construction was required to construct the building to enable the Defendants to fulfill the terms and conditions of the agreement.
It was contended that the Plaintiff has spent a sum of Rs. 1 lakh in order to obtain licence and plan and a sum of Rs. 18,000/- was deposited in addition to a sum of Rs. 18,370/- deposited. In the name of the Defendants before the Mysore City Corporation. Thus, in all a sum of Rs. 1,20,370/-was spent in addition to the amount of Rs. 50,000/- paid as advance.
Contending that when the work was about to be completed in two or three days, the Defendants instead of executing the sale deed, started evading to execute the sale deed in favour of the Plaintiff. Therefore, the Plaintiff got issued telegraphic notice on 30th September, 1996 since the Defendants made an attempt to demolish the building on 29.9.1996, on the ground that the value of the property had been escalated after entering into agreement. On the ground that the Plaintiff was ready and willing to perform his part of contract and on the ground Defendants are not willing to execute the sale deed, the suit was instituted to direct Defendants to execute the sale deed in terms of the agreement dt.3.1.1991 and 29.9.1995 or in the alternative to pass a decree against the Defendants for a sum of Rs. 7,50,000/- towards the loss sustained by the Plaintiff with interest at 18% p.a.
The Defendants contested the suit. According to them, the suit property was allotted to their grandfather late K.B. Lakshminarayanappa and after the death of their grandfather they succeeded to the plaint schedule property. As the land in question was an urban property they obtained an exemption u/s 20(1)(a) of the Urban Land (Ceiling and Regulation) Act, 1976 from the Government on 24.2.1984. While granting permission, Government had imposed a condition that the land shall not be sold, mortgaged or leased in favour of any person without prior permission from the Government. Therefore, the Defendants had no right to alienate the property in favour of the Plaintiff without prior permission or approval of the Government of Karnataka. Subsequently, the Defendants sought permission of the CITB and the Government to put up a construction of a theatre by them on the land. At this juncture, the Plaintiffs Managing Director approached the Defendants on the ground that Plaintiff Company is a dealer in buying and selling the properties and with an idea of making profit, by reselling the plaint schedule property for a higher price, the Managing partner of the Plaintiff Company entered into an agreement to purchase the property for a sum of Rs. 6,50,000/- on 3.1.1991, Subject to the terms and conditions of the aforesaid agreement, they admit the receipt of Rs. 50,000/- as advance sale consideration. They further agreed to receive the balance sale consideration at the time of registration of suit property and they could not get the permission from the Government in view of the conditions imposed by the Government on 24.2.1984. The agreement stipulates that the sale deed has to be executed within 3 months from 3.1.1991 and on account of non-according of permission by the Government, the sale deed could not be executed. They also admit the execution of agreement dt. 29.9.1995 and they explain the circumstances under which the said agreement came into existence. According to them in terms of the agreement dt. 29.9.1995 the time was extended by one more year to complete the transaction and that the Plaintiff had to obtain plan at its cost and construct the building of 6 squares and assess the building and obtain the sale deed by paying the sale consideration. The said agreement came into existence in order to over come the conditions imposed to sell the property by the Government According to them, the Plaintiff did not construct the building as agreed upon, since the Plaintiff was not ready and willing to purchase the property as he could not get a buyer to purchase the property. Since the Plaintiff did not put up construction within a period of one year as agreed upon as no sale consideration was paid to the Defendants, the Defendants sent a legal notice by returning the mount of Rs. 50,000/- which was paid as advanced on 30th September, 1996 and in addition to that they also lodged a complaint before the police since an attempt was made by the Plaintiff to put up construction just prior to 29.9.1996. They also contended that the Plaintiff was not ready and willing to purchase the property and the Plaintiff has no right to enforce the agreement, in view of advance of Rs. 50,000/-returned to the Plaintiff by means of a pay order. Therefore they requested the Court to dismiss the suit on the ground that they have already cancelled the agreement of sale
Based on the above pleadings the following issues were framed by the Court below:
(1) Whether the Plaintiff proves that he was ready and willing to perform his part of contract of agreement to sell?
(2) Whether the Plaintiff proves that in furtherance of the alleged agreement to sell between Plaintiff and the Defendant, the Plaintiff has been put in possession of the plaint schedule property?
(3) Whether the Defendants prove that, the time was the essence of the contract entered into between Plaintiff and the Defendants?
(4) Whether the Defendants prove that the Plaintiff had committed breach of contract?
(5) Whether the Defendants prove that they exercised the right of cancellation of the agreement to sell between the Plaintiff and the Defendants stand cancelled?
(6) Whether the Defendants prove that suit is not maintainable since possession of the plaint schedule property has not been sought by the Plaintiff in this case?
(7) Whether the Plaintiff proves that he is entitled for specific performance of agreement to sell?
(8) What order or decree?
In order to prove the respective contentions, the Managing partner of the Plaintiff was examined as PW1. An employee of the Plaintiffs company was examined as PW2. The Plaintiff relied upon Exs.P1 to P60. The 2nd Defendant - Srinath got himself examined as DW1 and also relied upon the evidence of D Ws.2 and 3 and Exs.D1 to D15. The Trial Court appreciating the evidence let in by the parties, held issues-1 and 2 in affirmative, issues-3 to 5 in negative, issue-6 as does not survives for consideration. Accordingly, the suit came to be decreed on 21.6.2003 directing the Defendants to execute the sale deed within 3 months failing which the Plaintiff is at liberty to get the sale deed registered and executed through Court. Being aggrieved by the judgment and decree of the Trial Court, the present appeal is filed.
5. We have heard, Sri T. Seshagiri Rao, learned Counsel appearing for the Appellants. We have also heard Sri Yoganarasimha, learned Senior Counsel appearing for the Respondent.
6. The main contention of the Appellants before us is that the Trial Court has committed a serious error in holding that the Plaintiff was ready and willing to perform his part of the contract and also committed an error in holding that the Defendants have failed to prove that the time was essence of the contract and further committed an error in holding that the Defendants did not prove that the Plaintiff committed breach of contract. It is also the case of the Appellants that the Trial Court has committed an error in holding that the Defendants have not exercised the right of cancellation of agreement and also erred in granting a decree.
7. According to the learned Counsel for the Appellants, the parties have not disputed the agreement entered into between them on 3-1-1991 whereunder, the Defendants have agreed to sell property for a sum of Rs. 6,50,000/- and a sum of Rs. 50,000/- was received as an advance and that the sale transaction has to be completed within three months from 3-1-1991. He further admits that the execution of the sale deed by the Defendants in favour of the Plaintiff would be subject to the Government granting permission to sell the property in favour of the Plaintiff under the provision of Urban Land (Ceiling and Regulation) Act, (hereinafter referred to as ''ULC'' Act) and the parties do not dispute that the application filed by the Defendants to obtain permission from Government to alienate the property under the provisions of ULC Act was declined by the Government. It is also not in dispute that the property is an urban property and vacant land can not be alienated without prior permission of the Government. Therefore, the learned Counsel for the Appellants submits that in view of refusal to grant permission by the Government to alienate the property, the agreement dated 3-1-1991 has become un-executable, and such an agreement cannot be enforced in any Court of law.
8. He further submits that, to overcome the permission to be obtained from the Government, the Plaintiff deviced a plan to convert the vacant land into a building property, pursuant to which, the Defendants entered into another agreement dated 29-9-1995. As per the second agreement dated 29-9-1995, the Plaintiff was duty bound to construct 6 Sq. building within one year and purchase the property as building from the Defendants by paying the balance sale consideration. The Trial Court without noticing that time was the essence of the contract to complete the transaction within a period of one year from 29-9-1995 and that it was for the Plaintiff to obtain permission from the Competent Authority to construct the building and to obtain licence and plan, in order to put up a building and to complete the building within one year has decreed the suit in favour of the Plaintiff. According to him what was required to be done by the Defendants was only to assist the Plaintiff to get permission. According to him, the assistance of the Defendants means, wherever their signatures are required, or any document is required by the Plaintiff to obtain licence and a plan to put up construction, the Defendants were required to put their signatures and supply the documents. According to him, though the Defendants cooperated, with the Plaintiff for the reasons best known to the Plaintiff, applied for grant of licence and plan only on 1-6-1996 i.e., 9 months after the second agreement dated 29-9-1995 and obtained a plan on 6-8-1996. Even though he had obtained the plan on 6-8-1996, did not commence the construction and did not complete the construction in accordance with the terms and conditions of the agreement dated 29-9-1995. The Trial Court without considering these facts wrongly came to the conclusion that the Plaintiff was ready and willing to perform his part of the contract and the time was not the essence of the contract by forgetting that the Defendants had agreed to sell the property for their legal necessity as per the agreement dated 3-1-1991 for a sum of Rs. 6,50,000/- by receiving an advance amount of Rs. 50,000/- and thereafter to complete the said transaction, they executed another agreement as per Ex.P.3 dated 29-9-1995. Even without receiving any further advance, with a specific condition that the sale transaction shall be completed within one year, failing which, the Vendors can cancel the agreement. Even after six years, the Plaintiff has not obtained sale deed by fulfilling terms and conditions of both the agreement and not paid or deposited the sale consideration. The Trial Court without appreciating the evidence of P.W.1 and D.W.1 has wrongly come to the conclusion that the Plaintiff was ready and willing to perform his part of the contract.
9. He further contends that the Court below has committed an error in coming to the conclusion that the Plaintiff was ready and willing to perform his part of the contract only based on the averments made in the plaint. According to him, the Plaintiff has reproduced verbatim sentences of Specific Relief Act without there being any evidence to show that the Plaintiff was actually ready and willing to perform his part of the contract. He further contends that the Trial Court having committed an error holding that the Plaintiff was ready and willing to perform his part of the contract, did not consider the case pleaded by the Defendants. According to him, the Defendants cancelled the agreement by issuing legal notice on 30th September, 1996 by enclosing a DD for Rs. 50,000/- received by them as advance sale consideration. Since an attempt was made on 29-9-1996 to put up construction, the Defendants lodged a complaint before the Police stating that the Plaintiff was trying to create some evidence to overcome his omission and commission and thereafter, he contends that the Trial Court did not consider the evidence of both the parties properly and on account of wrong appreciation of evidence, the Trial Court has decreed the suit
10. He further contends that though the Trial Court has decreed the suit directing the Appellants herein to execute the sale deed within a period of 3 months, did not even direct the Plaintiff to deposit the balance sale consideration of Rs. 6,00,000/-. When such a direction has not been issued by the Court below to the Plaintiff to deposit the balance sale consideration of Rs. 6,00,000/-, the Plaintiff cannot contend that the Plaintiff was ready and willing to perform his part of the contract. According to him, within a period of 3 months, the Plaintiff did not deposit Rs. 6,00,000/- being the balance sale consideration and no execution petition is filed requesting the Court to execute the sale deed by depositing the balance sale consideration of Rs. 6,00,000/-. He further contends that though the decree is passed on 21-6-2003, even after lapse of 7 years from the date of judgment and decree no amount has been deposited by the Respondent- Plaintiff till now. He further contends that the decree granted by the Trial Court has to be set aside only on this short ground. He further contends that the Trial Court did not appreciate that the suit property is situated in heart of the City of Mysore. It is more than one acre of land, cost of which on the date of suit was not less than Rs. 1.00 crore and as on today is more than 3 crores. What the Plaintiff has paid as an advance is only Rs. 50,000/- in the year 1991, when the first agreement Ex.P.1 was entered into between the parties. Therefore, he contends that while granting discretionary relief, the hardship that would be caused to the Defendants has not been appreciated and considered by the Court below since the Plaintiff who is a businessman interested to purchase and sell the property. On these grounds, he requests the Court to reappreciate the entire evidence and set aside the judgment and decree of the Trial Court.
11. He further submits that before the Court below, the Plaintiff has sought two prayers. The first prayer is to direct the Defendants to execute a sale deed by receiving the balance sale consideration. However, the Trial Court for the reasons best known to it, did not direct the Plaintiff to deposit or pay the balance sale consideration amount forthwith. The second prayer in the plaint is that an official of the Court for and on behalf of Defendants be directed to execute the sale deed in respect of the schedule property in favour of the Plaintiff and the third prayer is for a decree against the Defendants for recovery of Rs. 7,50,000/- on the ground that the Plaintiff has spent the said amount and same has to be recovered with interest at 18% p.a. In the circumstances, learned Counsel for the Defendants contends that in the real estate business in the City of Mysore between 1991-1994, the market value of the land was not so high. But from 1995 onwards, there was steep hike in the land value. As only Rs. 50,000/- was paid as an advance and no money was deposited by the Plaintiff, his readiness and willingness was not proved before the Court. He submits that the Trial Court should have considered the refund of advance amount of Rs. 50,000/-by the Defendants and the amount if any spent by the Plaintiff towards the property in question. Even though, a sum of Rs. 7,50,000/- was claimed by the Plaintiff, no evidence was lead in by this Plaintiff to show as to why and how he spent so much amount, except the amount deposited before the CITB or Corporation of City of Mysore in order to obtain licence and plan. In the circumstance he requests that by allowing the appeal, the Defendants/Appellants may be directed to refund the advance amount of Rs. 50,000/- or any sum spent by the Plaintiff either to obtain licence and plan or any payment made either towards betterment charges or taxes along with interest.
12. Per contra, Mr. Yoganarasimha, learned Senior Counsel appearing for the Respondent submits that the appeal has to be dismissed in limine as none of the grounds urged by the Appellant''s Counsel are tenable. According to him, the Plaintiff was ever ready and willing to perform his part of the contract and that the Plaintiff has proved that he was ready to take the sale deed by constructing the building. But the Defendants who agreed to execute a sale deed after construction have failed to execute the sale deed. Therefore by issuing notice, the Plaintiff has filed a suit to enforce the agreement. According to him, time is not the essence of the contract and the Defendant did not cancel the agreement of sale and the Defendants have no power to cancel the agreement of sale, as the Plaintiff did not commit breach of agreements as per Ex.P.1 and Ex.P.2. He lastly contends that even though the Trial Court has not directed the Plaintiff to deposit the money, the Plaintiff did not deposit the amount till today on account of Defendants approaching this Court. Therefore, he requests the Court to dismiss the appeal.
13. Now, in this background what is to be considered by us in this appeal is:
(1) Whether the Plaintiff was ready and willing to perform his part of the contract;
(2) Whether the time was the essence of the contract, in view of Ex.P2 agreement dated 29-9-1995.
(3) Whether the Trial Court is justified in granting the discretionary relief of specific performance;
(4) Whether the judgment and decree of the Trial Court has to be reversed on account of Plaintiff not depositing the balance sale consideration amount, within a period of three months?
(5) Whether the judgment and decree calls for interference or modification?
14. The following facts are not in dispute in this appeal. The Defendants being the owners of the plaint schedule property agreed to sell the property for a sum of Rs. 6,50,000/- under Ex.P.1 dated 3-1-1991 and received an advance sale consideration of Rs. 50,000/-. As per Clause (4) of the agreement, in view of prohibition under the provision of ULC Act, the Defendants agreed to make an application for securing the permission for sale of the property in favor of the Plaintiff. The Plaintiff agreed to assist the Defendants in expediting the decision of securing the permission of the Government. As per Clause (4) of the agreement, within 15 days from the date of agreement, the Defendants were required to file an application before the Government seeking necessary permission and three months time was stipulated to obtain permission and to execute the same. Obtaining of permission from the Competent Authority under the ULC Act is a condition precedent to execute the sale deed. Clause (7) of the agreement, further reads that if the Government refuses to grant permission to sell the property, the Defendants shall refund the advance amount of Rs. 50,000/- together with liquidated damages of Rs. 50,000/- and that the Plaintiff is not entitled to claim interest on the said amount. Only, if the amount is not refunded within 15 days from the date of refusal to grant permission, the Plaintiff can claim interest at 12% p.a. on the aforesaid amount. Therefore, it is clear that, to enforce the agreement dated 3-1-1991, the permission to sell the property by the Defendants in favour of the Plaintiff is a condition precedent. If permission is not granted, the agreement dated 3-1-1991 as per Ex.P. 1 is unenforceable under the law. It is also not in dispute that the application filed by the Defendants to alienate the property in favour of the Plaintiff under the provisions of ULC Act was rejected by the Government as a result of which, Ex.P. 1 has become unenforceable under the law.
15. It is also not in dispute that as per Ex.P.3, parties have entered into a supplemental agreement on 29-9-1995. The said agreement came into existence in the backdrop of refusal of permission to sell the property in favour of the Plaintiff under the ULC Act, the Plaintiff undertook to construct the building on the property and the Defendants agreed to assist the Plaintiff for the construction of the building thereby making necessary application for grant of licence. If, for any reasons, the sale deed is not executed by the Defendants in favour of the Plaintiff, the Plaintiff is entitled to remove the structure put up by him as per Clause (2) of the second agreement dated 29-9-1995 at Ex.P3. Clause (3) further reads that if the Plaintiff fails to take the sale deed within 12 months from 29-9-1995, the Defendants have a right to cancel the agreement and deal with the property in any manner by refunding the advance amount received by them from the Plaintiff. Subject to the above modification, all other clauses of agreement dated 3-1-1991, remain in force. Therefore, Ex.P.3 the second agreement dated 29-9-1995 is a continuous agreement of Ex.P.1. and cannot be treated as a separate and a distinct agreement. What has been stated in the second agreement is that within 12 months, the Plaintiff has to construct a building by obtaining licence and plan for which, the Defendants have to co-operate with the Plaintiff to enable him to obtain licence and plan and construct the building within 12 months. If the construction is not made and if the Plaintiff fails to obtain the sale deed within 12 months, the Defendants are at liberty to cancel the agreement by refunding the advance amount of Rs. 50,000/- only.
16. Ex. P.4 is the Form of sanction issued by the Corporation of City of Mysore for construction of a building as per Ex.P.5 the plan, is dated 6-8-1996. It is seen from Ex.P.4, that an application has been submitted by the Plaintiff in the name of the Defendants on 1-6-1996, 9 months after the Ex.P.3 and as per Ex.P.5, the Plaintiff was required to construct the building on a plinth area of 605.02 sq.mtrs. Ex.P.11 is a letter dated 19-9-1996 addressed by the Plaintiff to M/s. Apex Engineering, J.P. Nagar, accepting the quotation of M/s. Apex Engineers dated 14-9-1996 to complete the building in terms of Ex.P.5, requesting the Contractor to construct an industrial shed-cum-Office and a toilet as per the plan and issued a cheque for a sum of Rs. 30,000/- dated 18-9-1996 and the balance amount of Rs. 20,000/- would be payable on completion of the work. Ex.P.14 is a complaint lodged before the Commissioner of Police, Mysore City dated 17-10-1997 by the Plaintiff stating that the Defendants are trying to interfere with the construction. According to the Plaintiff by 29-9-1996, the work was almost completed and only finishing touches were required to be done, for which 2 or 3 days time was necessary, and Ex.P.14 is filed after the institution of the suit. Ex.P.17 is a telegram issued by the Plaintiff to the Defendants on 30-9-1996 stating that the building construction has been almost completed. On 29-9-1996, an attempt was made by the Defendants to prevent the work by Contractor. Ex.P.19 is the notice issued by the Defendants on 29-9-1996 to the Plaintiff stating that there is delay in taking up the construction and decision of the Defendants to put an end to the contract by canceling the agreement by returning the advance amount of Rs. 5,000/- by way of a Demand Draft. Ex.P.20 is a reply sent by the Advocate of the Plaintiff to Defendants'' advocate. Ex.P.59 is a letter addressed by the Defendants on 22-1-1996, authorising Sathish Kumar, the Managing Director of the Plaintiff to submit applications, documents, make submissions, remit fees/charges and to obtain licence and put up construction on the suit property. Based on these documents, the Managing Director of P.W.1 has deposed before the Court that the Plaintiff was ready and willing to purchase the property by paying the balance sale consideration and the Defendants are trying to evade to execute the sale deed on the ground that there is an escalation in the value of the property. He also deposed before the Court that the construction was completed in all respects. When the construction was about to be completed, the Defendants made an attempt to demolish the same.
17. The Managing Director has been cross-examined at length. In the cross-examination, he admits that Ex. D1 to Ex.D3 are the photographs to show the nature of constructions said to have been put up by the Plaintiff. Ex. D1 depicts that in a portion of site in a small area excavation of earth is made to put up foundation. Ex. D2 and Ex. D3 show that 11/2 square was constructed with hallow bricks with mud mortar, a shed which can be constructed by overnight and an attempt was made to show that the Plaintiff was ready and willing to perform his part of the contract.
18. In regard to the balance sale consideration, in the evidence of P.W.1, it is not properly elicited in regard to the financial capacity of the Plaintiff. Ex.P.30 is the accounts maintained by the Plaintiff. Ex.P.30 is a copy of the Day Book maintained by the Plaintiff which discloses the amount is standing in the credit of the Plaintiff. Though P.W.2. Mahendra was examined, he was examined only to mark some documents and whose evidence is of no assistance to prove the contentions of both the parties.
19. We have the evidence of Defendants D.W.1 is Defendant No. 2. D.W.2 and D.W.3 have been examined to show that there was no construction on the said property. Therefore, the evidence of D.W.2 and D.W.3 is of no assistance. What is required to be considered by this Court in order to appreciate the rival contention is the evidence of D.W.1 K.L. Srinath. He has deposed before the Court that he agreed to sell the property for his legal necessity for a sum of Rs. 6,50,000/-. According to him, the Defendants were badly in need of money and they received an advance of Rs. 50,000/- from the Plaintiff. Though the application filed by them under ULC Act was refused in order to overcome the same, the second agreement came into existence. According to him, within one year from the date of Ex.P.3, the Plaintiff was required to obtain the sale deed and the time was the essence of the contract. According to him, possession of the property was not delivered to the Plaintiff and that only permission was granted to put up construction as agreed upon under Ex.P.3. But the Plaintiff did not construct the building within the stipulated time and the Plaintiff made an attempt to commence the construction just 10 days prior to the expiry of the stipulated time. According to him, the Plaintiff had put up construction of 21/2 squares up to an height of 3 feet with fabricated cement hallow bricks with mud. Since the building was not constructed within the stipulated time, by issuing legal notice, the agreement was cancelled by refunding the advance sale consideration of Rs. 50,000/-. According to him, the Plaintiff might have spent Rs. 4,000/- to Rs. 5,000/- for construction. He has been cross-examined at length. Though be has been cross-examined at length, nothing is elicited in regard to construction put up by the Plaintiff as per the terms and conditions of Ex.P.3.
20. The Trial Court has held that the Plaintiff was ready and willing to perform his part of the contract mainly relying upon the oral evidence of P.W. 1 without considering the documentary evidence and that the Plaintiff did not produce any documents to show his capacity to purchase the property and to pay balance sale consideration within the extended period of one year. The Trial Court has also come to the conclusion that the Defendants have put the Plaintiff in possession and the Plaintiff is in possession pursuant to Ex.P. 16. The Trial Court has held that the Plaintiff was ready and willing to perform his part of the contract, mainly relying upon the oral evidence of P.W. 1 without considering the documentary evidence. The Plaintiff did not produce any documents to show his capacity to purchase the property by paying the balance sale consideration within the extended period of one year. The Trial Court has also come to the conclusion that the Defendants have put the Plaintiff in possession and the Plaintiff is in possession pursuant to Ex.P.16. The Trial Court has also held that the time is not the essence of the contract only on the ground that as per Ex.P.16, the Plaintiff was permitted to construct the building. On these ground, the Trial Court has held issues 1 and 2 in favour of the Plaintiff and further held that the Defendants have not cancelled the agreement and time is not the essence of the contract. Since, all the points which arise for our consideration are inter-linked, we would deal all the points together in this appeal.
21. As admitted by the parties, the transaction is not in dispute. The dispute is:
(i) Whether the Plaintiff was ready and willing to perform his part of the contract in terms of Ex.P.3?
(ii) Whether the time was the essence of the contract? and
(iii) Whether the Plaintiff has committed breach or not?
22. It is a fact that in the year 1991 as per Ex.P.1, the Defendants have agreed to sell the valuable property of 1 acre in the heart of City for a consideration of Rs. 6,50,000/- for their dire need. Receipt of Rs. 50,000/- is also not in dispute. The parties did not dispute the refuse of permission by the Government under the ULC Act as a result of which, Ex.P. 1 has become unenforceable. In order to overcome the permission to be obtained from the Competent Authority, at the instance of the Plaintiff, second agreement Ex.P.3 came into existence on 29-9-1995 under which, within a period of one year, the Plaintiff had to construct the building by obtaining licence and plan and obtain sale deed by paying the balance sale consideration. Under Ex.P.3, the entire burden of putting up construction lies on the Plaintiff and not on the Defendants. The Defendants are required to cooperate with the Plaintiff to get permission from the Competent Authority. The Plaintiff nowhere says that delay was caused in obtaining the licence and plan on account of latches on the part of the Defendants. As a matter of fact, Ex.P.59, dated 22-1-1996, the Defendants have issued no-objection in favour of the Plaintiffs Managing Director Satish Kumar to obtain licence and permission on their behalf from the Competent Authority. The Plaintiff has not explained as to why he did not file an application for obtaining licence and plan immediately after Ex.P.3. On the contrary, an application for grant of licence was filed 9 months after Ex.P.3.
23. As could be seen from Ex.P.4, permission was obtained by him on 6-8-1996. In terms of Ex.P.3, the building has to be constructed as per the licence and plan. Plan is produced as Ex.P.5. What was required to be constructed by the Plaintiff under Ex.P.5, a plinth area of 60.325 Sq. mtrs. The plan reveals that he has to construct a commercial complex, Store Room, Shed and Office. When the plan was obtained by the Plaintiff on 6-8-1996, when the Plaintiff was required to complete construction on or before 28-9-1996, is it possible for the Plaintiff to complete the building within one month such a huge shopping complex with office accommodation. After obtaining plan on 6-8-1996, the Plaintiff has entrusted the work to a Contractor in September 1996 as per Ex.P.11 by paying an advance of Rs. 30,000/-. Whether really the work was entrusted to M/s. Apex Engineering as per Ex.P.11 or not, is not made known to the Court, since, Contractor has not been examined by the Plaintiff. Even, if Ex.P.11 is considered as true for the sake of arguments, it is dated 19-9-1996. But as per the terms of Ex.P.3, the building has to be completed on or before 28th September, 1996 within 9 days, the building had to be constructed.
24. We have seen Ex.P. 14 which is dated 17-10-1996. After the institution of the suit, the Plaintiff has complained to the Commissioner of Police, Mysore City stating that by 29-9-1996 the building was completed in all respects, except finishing touches which required only 2 or 3 days. In this background, let us examine as to when the Contractor could have commenced the construction. The Contractor can commence the construction subsequent to Ex.P.11 dated 19-9-1996. Even if it is considered that the Contractor commenced the construction 20-9-1996 itself, is it possible for any contractor to construct a commercial complex with Office Shed measuring 60.325 Sq.mtrs within 09 days. Therefore, the entire evidence of P.W.1 has to be disbelieved. Unfortunately, the Trial Court did not consider the documents produced by the Defendants.
25. In this background, let us see Ex.D.1 to Ex.D.3, photographs produced by the Defendants. P.W.1, in the witness-box, admits the correctness of Ex.D. 1 to Ex.D.3. Ex.D.1 shows excavation of earth made in a small area of 10 X 10, Ex.D.2 and Ex.D3 show that an attempt is made to put up construction by using hallow bricks with mud and not even by using cement. By looking into Ex.D2 and Ex,D.3 one can hold that it is nothing but a watchman shed. Unfortunately, the Trial Court did not appreciate the evidence let in by the parties. Without examining the documents and scrutinizing the evidence, the Trial Court has come to the conclusion that the Plaintiff was ready and willing to perform his part of the contract.
26. Even if we accept the arguments advanced by Mr. Yoganarasimha, that the Plaintiff was ready and willing to perform his part of the contract and time was not the essence of Contract, we haw to consider the conduct of the parties. The Defendants agreed to sell their valuable property for a consideration of Rs. 6,50,000/- for their dire need. When the Plaintiff has paid only Rs. 50,000/- even if there was a delay in putting up construction in terms of Ex.P.3, if the Plaintiff had made an effort to pay the balance sale consideration amount, the Court could have appreciated the conduct of the Plaintiff. It is not the case of the Plaintiff that the Defendants after entering into Ex.P. 1 and Ex.P.3, made an attempt to alienate the property to some third parties. The allegation in the plaint as well as in the evidence is that the Defendants taking advantage of the expiry of one year, trying to avoid the contract. If it is so, the case of the Defendants is more probable and acceptable. The Defendants have waited from 1991 to 1996. If they are unable to receive the balance sale consideration till 1996, the Court cannot find fault with the conduct of the Defendants in refunding the advance amount of Rs. 50,000/-. The Trial Court without considering the evidence, wrongly quoting the decisions of the Hon''ble Supreme Court and this Court, which are not applicable in the background of the case has decreed the suit of the Plaintiff, directing the Plaintiff to execute the sale deed within a period of 3 months.
27. The Trial Court while decreeing the suit and directing the Plaintiff to execute the sale deed, has not even directed him to pay deposit the balance sale consideration amount of Rs. 6,00,000/-, however, three months time has been fixed by the Trial Court to execute the sale deed by the Defendants. Even if the suit is decreed in favour of the Plaintiff, the conduct of the Plaintiff in not depositing the amount within three months and even as on today, nearly seven years after the decree is passed by the Trial Court, no Court can direct the Appellants-Defendants to execute the sale deed in favour of the Plaintiff who was not always ready and willing to perform his part of the contract. Atleast, the Plaintiff could have deposited the balance sale consideration of Rs. 6,00,000/- immediately after the passing of the decree or with in a period of three months from the date of the Judgment,
28. The arguments advanced by the learned Senior Counsel Yoganarasimha in this regard is that on account of the pendency of this appeal, the Plaintiff has not deposited the balance sale consideration. Such an argument cannot be accepted far the fallowing reasons:
29. Admittedly, the suit is decreed on 21-6-2003, 3 months time was granted to execute the decree by the Defendants, on or before 20-9-1996, the Plaintiff was required to deposit the balance sale consideration amount of Rs. 6,00,000/- which has not been deposited or paid by the Plaintiff. He has not even filed an execution immediately after the expiry of 3 months by paying balance sale consideration.
30. The present appeal is filed on 5-9-2003 and the matter was posted for admission on 10-10-2003, on which date, the judgment and decree of the Trial Court was stayed. The Appellants were directed not to alienate the property or encumber the property in any manner pending disposal of the appeal. From 21-6-2003, the Plaintiff-Respondent did not deposit the money. What is stayed by this Court is only judgment and decree of the Trial Court, but there is no prohibition for the Respondent-Plaintiff to deposit the balance sale consideration and as on today, no application is filed by the Plaintiff seeking extension of time to deposit the money. In this background, no Court would accept the arguments advanced by the learned Senior Counsel. It only shows that the Plaintiff had no capacity to deposit the balance sale consideration in spite of obtaining decree of specific performance. As rightly pointed out by the learned Counsel Sri T. Seshagiri Rao that there is steep escalation in the value of land in and around Mysore City, on account of IT and BT projects. The agreement is of the year 1991 and the sale consideration agreed to be paid is Rs. 6,50,000/-. What has been paid by the Plaintiff is only an advance of Rs. 50,000/-. As on the date of filing of the suit, there was a steep escalation in the cost of the property from 1995 onwards. According to him, the value as on the date of suit was more than a crore, and as on today, it is more than 3 crores. But, only a paltry sum of Rs. 50,000/- has been paid by the Plaintiff in the year 1991 and therefore he cannot be granted a decree for specific performance in respect of the property worth more than 3 crores of rupees and if such a decree is not reversed, it causes great hardship to the Appellants, and it would be a discrimination made to the Appellants who have suffered loss for no fault of them.
31. In the circumstances, We are of the opinion that all the points raised in this appeal are to be answered in favour of the Appellants and against the Respondent. We have to reverse the findings of the Trial Court, as perverse.
32. After reversing the judgment and decree of specific performance, We have to consider whether the Plaintiff is entitled for an alternative relief claimed by him. The Plaintiff has sought for a decree of Rs. 7,50,000/-with interest at 18% p.a. Learned Counsel for the Defendants-Appellants has submitted that during the course of his argument, the Plaintiff is entitled to claim refund of Rs. 50,000/- paid as advance and the actual amount spent by the Plaintiff towards betterment charges, tax etc., and any amount spent in order to obtain licence and the plan as per Ex. P.4 and Ex. P.5 and other series. Admittedly, no evidence is let in by the Plaintiff to show the actual amount spent by him in order to claim an amount of Rs. 7,50,000/- as liquidated damages. But, the documents produced by the Plaintiff would reveal that Rs. 1,20,370/- is actually paid or deposited by the Plaintiff. In addition to that, we are also of the opinion that the Plaintiff might have spent about Rs. 70,000 or Rs. 80,000/- towards miscellaneous expenditure to obtain the licence and plan. Therefore, we assess a sum of Rs. 2,00,000/- towards the expenditure incurred by the Plaintiff. We are also of the opinion that the Plaintiff is entitled to refund of Rs. 50,001/-which was paid to the Defendants as advance Thus, in all the Plaintiff is entitled for a sum of Rs. 2,50,001/- which shall be paid by the Defendants along with interest at the rate of 18% p.a. from the date of suit till the date of payment in addition to that, considering the escalation in the value of the property as the Defendants have also been benefited, We direct the Defendants to pay a sum of Rs. 5,00,000/- as liquidated damages which shall not carry any interest and the said amount shall be paid within 3 months from today. If the amount as ordered is not paid, the same shall carry interest at the rate of 24% p.a to be calculated from today.
33. At this stage, learned Counsel for the Appellants submits that the Appellants have already deposited a sum of Rs. 50,000/- received by them as advance sale consideration, before the Court below. Therefore, he submits that the Defendants are liable to pay only a sum of Rs. 2,00,000/-which has been ordered to be paid by this Court. If it is so, the Defendants are liable to pay only a sum of Rs. 2,00,000/- with interest at 18% p.a.
34. In the result, the appeal filed by the Appellants is allowed. Judgment and decree passed by the Principal Civil Judge (Sr. Dn.), Mysore dated 21-6-2003 in O.S. No. 351/1996 are hereby set aside modifying the judgment holding that the suit filed by the Respondent- Plaintiff to enforce the agreement dated 3-1-1991 and 29-9-1993 is dismissed. The Defendants-Appellants are directed to refund a sum of Rs. 2,00,000/- with interest at 18% p.a. from the date of the suit which amount shall be paid within 3 months from today. In addition to that, the Defendants are also directed to pay a sum of Rs. 5,00,000/- which shall also carry interest at the rate of 24% p.a. to be calculated after the expiry of 3 months from today.
In addition to above the Plaintiff is also permitted to withdraw the amount of Rs. 50,000/- deposited by the Defendants before the Court below.
Parties to bear their own costs.
