Monday, 22 August 2016

When plea of bonafide purchaser for value can not be accepted?

Coming to the next part of this point regarding the subsequent sale of the suit properties in favour of respondent Nos. 2 to 6 and the deceased Nizam Mohamad under Exs. A. 14 and A -15, it is fantastic,unbelievable but relevant for consideration since the property which has been agreed to be sold for a sum of Rs. 3,50,000/- in favour of the appellant has been sold for an amount of Rs. 61,000/- and, therefore, no further evidence need be necessary for the subsequent sale to have been taken as sham and nominal.
While so many transactions are going on including paper publications, it cannot also be said that the purchasers therein were not aware of the earlier agreement in Ex.A.6 nor did they have any other information to the said effect. This part of the case relating to the subsequent sale or purchase by the respondent Nos.2 to 6 and the deceased Nizam Mohamad under Exs.A.14 and A.15 respectively dated 25-5-1984 and 26-5-1984 have neither been discussed properly nor answered in the manner expected by law by the lower Court.
53. Moreover, it further comes to be known that the subsequent purchasers had sufficient time to enquire prior to getting the sale deed registered in their favour but they do not seem to have made such genuine enquiries in and around the area where the property locates and the parties reside and it is the legal maxim "CAVEAT EMPTOR" which would apply to the case in hand. It is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to be property to be purchased prior to committing in any manner and hence they cannot simply come forward to put up the general plea that they are the bona fidepurchasers for value and without notice especially when the purchase is not for the proper value, which would only indicate sham and nominal. This point is answered accordingly.
MADRAS HIGH COURT

Sri Brahadambal Agency and Partnership Firm  V. Ramasamy and others

Dated :  23.7.2001.



Citation 2002 AIR (Madras) 352

V. Kanagaraj, J. - Both the above Appeal Suit and the Cross-Objection are directed against the judgment and decree dated 7-10-1987 rendered in O.S. No. 86 of 1985 by the Court of Subordinate Judge, Puduk-kottai whereby the trial Court besides dismissing the suit filed by the appellant for specific performance and for delivery of possession or in the alternative directing the first defendant to pay a sum of Rs. 3,00,000/- as compensation and for costs, also inflicted a sum of Rs. 1,00,000/- as damages against the appellant with proportionate costs and future interest till payment of the due.
2. The appellant, a partnership firm, has filed the suit against the defendants, who are ten in number, on averments such as that the plaintiff is dealing in real estate : that by an agreement dated 12-12-1982 entered into in between the plaintiff and the first defendant, the plaintiff agreed to buy and the first defendant agreed to sell on approximate extent of 10 acres of land which is the suit property for a sale consideration of Rs. 3,50,000/- to the rate of Rs. 35,000/- per acre and on the same day, the plaintiff paid an advance amount of Rs. 50,101/- to the first defendant that the other terms of the agreement are (i) that the plaintiff has to pay to the first defendant a further sum of Rs. 50,000/- on or before 31-12-1982 as part payment of the purchase money, lest the agreement will stand cancelled, (ii) that the plaintiff has to pay the balance amount of Rs. 2,49,899/- on or before 12-6- 1983 and get the sale deed executed by the first defendant (iii) that in the event that he is unable to pay the said amount in lumpsum, the plaintiff is at liberty to purchase the property piecemeal by getting a sale deed for only one acre at a time on payment of Rs. 35,000/- and adjust the advance of Rs. 1,00,101/- towards the sale price of the last three acres and in case the plaintiff fails to pay the sum of Rs. 2,49,899/- on or before 12-6-1983, the advance so far paid by the plaintiff is to be forfeited and the plaintiff is liable to pay Rs. 1,00,000/- by way of damages; (iv) that the actual area of the plot to be conveyed, as on ground is to be ascertained by measurement and the price to be paid by the plaintiff will be according to the actual area available on ground at the rate of Rs. 35,000/- per acre.
3. The further case of the plaintiff is that in the manner aforementioned, the agreement provided two modes of purchase of the suit property at the option of the plaintiff, with no stipulation as to when the first sale deed is to be executed thus indicating that time is not the essence of the contract : that the area agreed to be sold, on measurement, was found to be only 8.20 acres; that the first defendant on coming to know of the plaintiff's plan to make a large profit, started thwarting the plaintiff by dubious means, one of them being setting up his own brother Sombandam to claim a share in the suit properties;
that he also gave out that his undivided sons have a share and they are likely to dispute the binding nature of the agreement in plaintiffs favour and thus resolved to compel the plaintiff to pay additional sum towards the sale price or to withdraw from the transaction altogether and in spite of the plaintiff's attempts to meet him in person on or before 31-12-1982 and pay him the sum of Rs. 50,000/- proved futile since the first defendant was evading to meet the plaintiff.
4. The further case of the plaintiff is that he issued a telegram dated 30-12-1982 requiring the first defendant to clear the cloud on title and receive the money on 31-12-1982 as per the terms of the agreement, but, instead of complying with the request, the first defendant issued a reply on 5-1-1983 charging the plaintiff with breach of contract and terminating the very agreement with forfeiture of the advance amount of Rs. 50,101/- coupled with a claim of Rs. 1,00,000/- as damages since the plaintiff was not having the required money.
5. The plaintiff would further submit that the first defendant is bound to prove his marketable title free from encumbrances and receive the next instalment of Rs. 50,000/- that without clearing the title, the first defendant was only interested in accusing the plaintiff of having not equipped with the sum of Rs. 50,000/- that later on, however, the first defendant informed the plaintiff that his brother had no right in the suit property; that showing a letter signed by their father and attested by the brother to the effect that he alone is entitled to the property in question absolutely, he promised to obtain the concurrence of his sons also, that apprehending that the first defendant was not bona fide in his representation and was only gaining time to protract the matter beyond 12-6-1983 to make it appear that he was ready and that the plaintiff was not ready with the balance consideration, he issued a telegram on 9-6-1983 to the first defendant calling on him to come to the Registrar's Office and execute the sale deed in his favour on receipt of the entire balance consideration before the Sub Registrar purchasing the stamp papers also on 10-6-1983 itself, but the first defendant never turned up in spite of the plaintiff being ready with the balance sale consideration and the required stamp papers.
6. The plaintiff would further submit that thereafter the first defendant informed him that from all his sons he would get a Central Power of Attorney enabling him to execute the sale deed without further delay, consequent to which though all his sons executed the power of attorney in favour of the first defendant on 30-10-1983 registering the same, in a short while, the fourth son RM. Sellappan cancelled the power of attorney by a registered deed dated 12-1-1984 and later he was given to understand that in May, 1984, the first defendant, in a clandestine manner was making arrangements with defendants 2 to 6 and the deceased Nizam Mohamad to create some documents in their favour with respect to the suit property; that even the plaintiff met the defendants 2 to 6 and the said Nizam Mohamad in the second week of May, 1984 and showed them the agreement dated 12-12-1982, but as feared the first defendant had executed a sale deed on 25-5-1984 in favour of the defendants No. 2 to 6 and the deceased Nizam Mohammed who was the husband of the 7th defendant and father of defendants 8 to 10 purporting to convey 6.20 acres in the suit property for a sale consideration of Rs. 46,500/-, that the first defendant and his sons had also executed another sale deed dated 26-5-1984 purporting to convey 2 acres of land in the suit property at a sale price of Rs. 24,500/- in favour of the 6th defendant, which is a partnership firm of which defendants No. 2 to 5 and the deceased Nizam Mohamad were partners; that both the above sale deeds are sham and nominal created in collusion with the first defendant and the recitals of consideration are false, fictitious and illusory; that no consideration had passed on as recited in both the sale deeds; that neither the title passed nor the vendees became the real owners and they are only name lenders; that the purchasers are not bona fide purchasers for value and without notice and they knew the existence of the agreement dated 12-12-1982 in between the plaintiff and the first defendant since the plaintiff had already published in the popular daily "Dina Malan" dated 15-1-1984 about the existence of the agreement with respect to the suit properties and has invited offers to purchase plots therein for house sites.
7. The plaintiff would further submit that he gave notice through his Lawyer dated 12-6-1984 to defendant Nos. 1 to 6 and the deceased Nizam Mohamad calling upon them to execute the sale deed in his favour as per the agreement dated 12-12-1982; that the first defendant refused to receive the said notice and defendant Nos. 2 to 6 and the said Nizam Mohamad gave a reply dated 24-6- 1984 repudiating the plaintiff's claim as false and untenable; that these notices have been followed by a rejoinder and reply thereto on both sides. On such and other allegations, ultimately submitting that the plaintiff was always ready and willing to get the sale deed in his favour and was not at fault, would file the suit praying for the reliefs extracted supra.
8. In the written statement filed by the first defendant, besides generally denying the allegations of the plaint, he would recite the main terms of agreement as it had been in the agreement dated 12-12-1982 and would lay emphasis on the said conditions and would submit that the plaintiff having paid a sum of Rs. 50,101/- as advance, should have paid the further sum of Rs. 50,000/- on or before 31-12-1982 and in default of such payment, the agreement would become invalid and could not be enforced. It would further be contended that though the option was given to purchase acre by acre, the plaintiff should have exercised his option within 12-6-1983 lest, he would not only lose the advance amount but also would be liable to pay a compensation of Rs. 1,00,000/- besides the agreement becoming cancelled automatically; that on failure by the first defendant to execute the sale deed on receipt of the balance consideration within 12-6-1983, the plaintiff should get compulsory registration of the same.
9. The further averments of the written statement are that the partners of the plaintiff firm were not having Rs. 50,000/- to be paid to the first defendant on or before 31-12-1982 and hence with the view to avoid the agreement, they conspired with the brother of this defendant Sambandam and entered into an agreement of sale of the properties in S. No. 97/1 including the suit properties; that the said Sambandam had no interest or claim in the suit properties or any other properties; that the plaintiff had paid an advance of Rs. 10,000/- on 29-12-1982 to Sambandam and lateron the four partners got a sale deed from the said Sambandam on 16-2-1988 on the allegation that the payment of sale price of Rs. 3,50,000/- should be paid on various dates: that this transaction is a sham and nominal one brought in collusively to defeat the rights of the first defendant in the suit properties falsely alleging that Sambandam had claim and interest in the suit properties.
10. Further stating that the relationship of the first defendant with Sambandam being inimical, he had acted in collusion with the plaintiff to execute the said sale deed and would also state that the possession of the lands concerned with those sale deeds was not given to the plaintiff, that the telegram issued by the plaintiff to the first defendant dated 30-12-1982 bore false allegations : that after due enquiry and check up that the first defendant had sound and marketable title to the suit properties with the patta standing in his name and the possession being with him only, the plaintiff entered into the agreement dated 12-12-1982 and they knew full well that there was no encumbrance and Sambandom had no interest or claim in the suit property; that this defendant issued a reply telegram dated 5-1-1983 and since the property was nil encumbered, the plaintiff should have paid the advance amount of Rs. 50,000/- on 31-12-1982 and should have avoided the termination of the contract.
11. The first defendant would further allege that the plaintiff has no business to get in touch with Sambandam and enter into an agreement with him to purchase the suit properties along with other properties in Pallathivayal and to pay the advance on 29-12-1982 further suppressing the fact of having entered into an agreement with Sambandam which would only show that he had colluded with the said Sambandam to thwart the contract entered into with the first defendant. Further denying that he met the defendant after the issue of the notice dated 5-1-1983 and the letter alleged to have been given to the plaintiff, this defendant would submit that neither Saminathan Chettiar signed nor Adaikkammal Achi put her thumb impression in the draft letter and in fact, the said letter was filed by Sambandam in O.P. No. 5 of 1984 in the Succession Certificate proceedings before the trial Court thereby claiming half share of all properties of Saminathan and the same has been rejected by the Court in the said proceedings; that after the termination notice dated 5-1-1983, no reply had been issued till 12-6-1983 thereby indicating acceptance of the termination letter : that the telegram dated 9-6-1983 and the further statement that he purchased the stamps on 10-6-1983 and waited in the Sub- Registrar's Office that day are all false.
12. This defendant further rebutting the other allegations of the plaint would state that the power of attorney in favour of this defendant to sell the property was given by his sons since he required a large amount for his daughter's wedding. On such and other allegations, further questioning the cause of action and the very maintainability of the suit for non impleading the other partners, this defendant would ultimately pray to dismiss the plaintiff's suit with exemplary costs and grant a decree in favour of this defendant for the counter claim of Rs. 1,00,000/- with subsequent interest at 12% p.a. from the date of suit with costs.
13. The plaintiff would also file a reply statement in answer to the first defendant's counter claim stating that the first defendant is bound by law and in equity to have a clear marketable title free from encumbrances, but making misrepresentations that he was the sole owner and had absolute title to the suit property, entered into the agreement on 12-12-1982; that the subsequent conduct would show only his mis-representations; that in the lengthy written statement, the first defendant has not stated as to how he acquired clear title to the suit property on the date of agreement and even before 31-12- 1982; that the patta chitta and adangal are not monuments of title;that the plaintiff tendered payment of Rs. 50,000/- by telegram dated 30-12-1982 and by notice, but he was not willing to receive the sum and only issued a suicidal reply on 5-1-1983 revoking the contract and again evaded the receipt of the plaintiff's letter dated 12-1-1983; that by yet another telegram dated 9-6- 1983, the plaintiff once again tendered the entire balance of sale price with several similar notices which were all evaded or refused and therefore it was the first defendant who committed the breach of contract and therefore he is entitled to the specific performance :
that only ascertaining the rights of the first defendant and his brother Sambandam, the plaintiff purchased the share of Sambandom by registered sale deed dated 16-2-1983 and that the plaintiff was ready and willing to purchase the suit property for the agreed sum. On such grounds and terming the compensation claimed by the first defendant is only adding insult to injury, the plaintiff would pray to dismiss the counter-claim of the first defendant further decreeing the suit with costs.
14. In the written statement filed by the defendants 2 to 10, besides generally denying the plaintiff's claim as false and not maintainable, they would also state that they were not aware of the allegations contained in Para Nos. 5(1) and 5(2) of the plaint further denying their truth, validity and binding character; that their best enquiries did not reveal any such agreement between the first defendant and the plaintiff as alleged in the plaint and the suit has been filed only to blackmail these defendants. These defendants would also deny knowledge of the other allegations of the plaint.
15. These defendants would further allege that the first defendant expressed his willingness to sell 8.20 acres of lands to them and on payment of due consideration, they got the sale deeds executed in their favour on 25th and 26th of May, 1984 and they have also taken possession of the said properties and spending huge money, they reclaimed the same and effected improvements; that the lay out prepared by them was duly approved by the authorities of the Town Planning Department of Sivaganga as per the approval order dated 11-7- 1984; that it is false that the plaintiff or anybody met or approached these defendants and showed them the agreement dated 12-12-1982; that the defendants 2 to 6 and Nizam Mohamed purchased the suit properties for valuable consideration and they are bona fidetransferees for value and without notice and the said sales in their favour cannot be set aside in any manner and that they have acquired valid title to the properties conveyed to them.
16. The further averments of this written statement are that there was no enforceable contract; that they were not aware of the publication dated 15-1- 1984 nor did the plaintiff meet the defendants No. 2 to 6 in the second week of May, 1984 and showed the said agreement. These defendants would firmly allege that the plaintiff is not entitled to the relief of specific performance on account of the long delay and latches and as he has no equity in his favour for enforcing such an agreement since the relief sought for is discretionary; that does not appear from the documents filed along with the plaint that time had not been considered the essence of the contract and the plaintiff having not sought for the specific performance within a reasonable time, he is not entitled to the discretionary relief. On such and other formal allegations, these defendants would also pray to dismiss the suit with costs.
17. The lower Court, based on the above pleadings by parties, has framed nine issues viz.
    1. Whether time was considered to be the essence of the contract pertaining to the agreement dated 12-12-1982 entered into in between the plaintiff and the first defendant?
    2. Whether it was the plaintiff or the first defendant who was responsible for the revocation of the contract?
    3. Whether the defendants No. 2 to 6 and the deceased Nizam Mohamed purchased the suit properties from the first defendant for value and with the knowledge of the agreement dated 12-12-1982?
    4. Whether the defendants Nos. 2 to 6 and the deceased Nizam Mohamed have acted as name lenders of the first defendant?
    5. Whether the sale deeds dated 25-5-1984 and 26-5-1984 under which the defendants Nos. 2 to 6 purchased the suit properties are sham and nominal?
    6. Whether the plaintiff is entitled to specific performance of the agreement dated 12-12-1982?
    7. Whether the plaintiff is entitled to damages, if so, to what extent?
    8. Whether the first defendant is entitled to get damages from the plaintiff and if so to what extent? and
    9. What reliefs, if any, is the plaintiff entitled to?
18. Having framed the above nine issues for determination of all the questions that have arisen in the whole of the suit, the trial Court has conducted the trial in which eight witnesses have been examined on the part of the plaintiff for oral evidence as P.Ws. 1 to 8, of whom the first plaintiff is P.W. 1 and two witnesses have been examined on the part of the defendants as D.Ws. 1 and 2 of whom D.W. 1 is the first defendant. So far as the documentary evidence placed on record is concerned, on the part of the plaintiff, 29 documents would be marked as Exs. A. 1 to A. 29 and on the part of the defendants 23 documents have been marked as Exs. B.1 to B. 23 and as third party document, one document would be marked.
19. The trial Court, then, in consideration of the facts and circumstances pleaded by parties in the light of the above evidence placed on record and appreciating the same in its own way issuewise, would not only dismiss the suit with costs but also would grant the relief in favour of the first defendant thereby directing the plaintiff to pay a sum of Rs. 1,00,000/- to the first defendant and adjusting the advance amount already paid by the plaintiff, would direct the plaintiff to pay the rest of the amount of Rs. 49,899/- to the first defendant with interest at 6% p.a. Aggrieved, the plaintiff has come forward to prefer the above Appeal Suit while the first defendant has filed the Cross-Objection aggrieved against the deduction of the advance amount from the sum of Rs. 1,00,000/- ordered by the lower Court further praying to decree the counter claim for the whole amount of Rs. 1,00,000/- since the advance amount paid by the plaintiff is to be forfeited as per the terms of the agreement dated 12-12-1982.
20. During arguments, the learned senior counsel appearing on behalf of the appellant besides giving a clear picture of the pleadings by parties would lay emphasis on the time element which plays a major role in such agreements as of Ex. A. 6 and would say that in all cases of immovable properties such as one in the case in hand being the subject- matter of contract for sale, the uniform proposition arrived at by the upper forums of law is that time is not the essence of the contract whereas the lower Court has erroneously decided without any tangible reason offered that time is considered the essence of the contract in the present case. The learned senior counsel would then point out that the purchase of the land by the appellant from Sambandam and the first respondent's son have nothing to do with the agreement under Ex. A. 6 and that the lower Court has gone wrong in connecting the appellant's purchase of the shares of Sambandam and Chellapan when the matter is subjudice in a separate suit for partition; that the lower Court is not at all justified in giving credence to Ex. B. 7 when neither Sambandam nor Chellappan is a party to the case before it. The learned senior counsel would then exhort that the entire case has been decided by the lower Court merely on the presumptions and surmises without having the least regard for the documentary evidence borne from Exs. A. 1, A. 6, A. 8, A. 10, A. 11 and A. 17 and the oral evidence of P.Ws. 1 to 3 and 5.
21. The learned senior counsel for the appellant would further argue that the lower Court has grievously erred in overlooking and crossing over the provisions of Section 16(c) of the Specific Relief Act according to which it is not essential for the plaintiff to actually tender to the defendant or to deposit in Court any money except when so directed by the Court"; that the trial Court is not justified in observing that the power of attorney ought to have been cancelled by the sons of the first respondent at the instance of the appellant while as a matter of fact, the original cancellation deed Ex. B. 1 has been filed into Court by the first respondent himself, that the lower Court failed to note that the purchase made by the respondents 2 to 6 under Exs. A. 14 and A. 15 were far too low a price and it clearly shows that they are not bona fide purchasers for value; that in this context, the trial Court has miserably failed to consider that the same first respondent subsequent to Ex. A. 6 has sold out a land at Rs. 65,000/- per acre under Ex. A. 16; that there is absolutely no nexus between the total price offered on the part of the respondents No. 2 to 6 i.e. Rs. 76,000/- and the price offered on the part of the plaintiff/appellant at Rs. 3,50,000/- for the entire extent agreed to be purchased.
22. The learned senior counsel for the appellant would not only discredit the judgment of the lower Court on account of its failure to meet with the legal points as, it is given expression to by the Legislature and the propositions of law so as to deny specific performance in favour of the appellant, which in all probabilities the lower Court should have granted, but on the contrary, it has unreasonably allowed damages also to the tune of Rs. 1,00,000/- in favour of the first respondent. On such reasons the learned senior counsel would pray to allow the appeal in full setting aside the judgment and decree of the lower Court.
23. On the other hand, the learned counsel appearing on behalf of the first respondent and the cross-objector would submit that from a reading of the document in Ex. A. 6 and on examination of witnesses, the learned Judge has found that the time is the essence of the contract so far as the agreement in the case in hand is concerned; that the appellant would set up the first respondent's brother Sambondam to allege that the first respondent is not having marketable title to the suit property and that he has also taken a sale deed from his brother under Ex. B.2 dated 15-2-1983; that on this document, the plaintiff had filed a suit for partition and purchased the share of Sambandam under Ex. B. 2 and this suit came to be dismissed and the appeal also got dismissed and that to file the dismissed judgment under Order 41, Rule 27, the appellant has filed the petition in C.M.P. No. 7900 of 2001:
that Sambandam was adopted by another and it was only the first respondent who was having marketable title to the suit property but the appellant says that Sambandam also has right in the suit property; that the other side objects the allowing of the document with the above C.M.P. on grounds, (i) that the property covered in O.S. No. 163 of 1987 is different from the present case and (ii) that he had filed the Second Appeal in S.A.S.R. No. 687 of 2001 and, therefore, the judgment is not binding; that there is deposition to the effect that it includes the suit property and the contention of the other side that the suit property is different is wrong : that so long as this judgment is not set aside, the appellant cannot get any relief in the present suit.
24. Continuing his argument on merit, the learned counsel for the first respondent would point out that it is a contract for sale of immovable property based on Ex. A. 6 agreement dated 12-12-1982; that there is no agreement under Ex. A. 6 but as a condition precedent encumbrance was sought to be cleared further pointing out Exs. A. 8 and P.W. 1's evidence, the learned counsel would say that regarding the date fixed on Ex. A. 6 agreement, there is no dispute at all. At this juncture, the learned counsel would cite four judgments respectively reported in :
    1. AIR 1980 Delhi 188 (Smt. Kamal Rani v. Smt. Chand Rani)
    2. AIR 1993 Supreme Court 1742 (Smt. Chand Rani (dead) by L.Rs. v. Smt. Kamal Rani (dead) by L.Rs.)
    3. AIR 1996 Supreme Court 1504 (M/s. P.R. Deb and Associates v. Sunanda Roy)
    4. AIR 1992 Punjab and Haryana 153 (Waryam Singh v. Gurnam Singh).
25. In the first judgment cited above, it has been held :
    "...........it was clearly in evidence that the vendor wanted Rs. 98,000/- to be paid within a week but at the request of the vendee the period of 10 days was stipulated in the agreement of sale. The word only as used second time in the clause of the agreement was used to qualify the period of 10 days. The time was, therefore, essence of the contract and the non-payment of Rs. 98,000/- the vendee within 10 days entitled the vendor to treat it as no breach committed by the vendee. The vendee, therefore, was not entitled to a decree for specific performance."
26. In the second judgment cited by the learned counsel for the first respondent, it has been held by the larger Bench of the Apex Court :
    "In the case of sale of immovable property, there is no presumption as to timebeing the essence of the contract. Even if it is not of the essence of the contract, the Court may infer that it is to be performed in a reasonable time if the conditions are : (1) from the express terms of the contract : (2) from the nature of the property : and (3) from the surrounding circumstances, for example : the object of making the contract."
    "Where in an agreement to sell the immovable property it was stipulated that amount in part was to be paid within 10 days of the execution of the agreement and the balance has to be paid at the time of registration of deed and it was agreed that the vendor would redeem the property which was mortgaged and also obtain the income- tax clearance certificate and the word only was used twice i.e. to qualify the amount and to qualify the period of payment of such amount i.e. ten days it was held that the intention of the parties was to make time as essence of contract and in such case, when the purchaser was not ready and willing to pay the amount in part as agreed, before delivery of possession and income-tax clearance certificate and redemption of property, it was contrary to the conditions of the agreement and the purchaser was not entitled to the specific performance of contract."
27. In the third judgment cited by the learned counsel for the first respondent it has been held :
    "Specific performance of contract - Agreement for sale of immoveable property Terms of agreement stating respondent purchaser to make part payment within stipulated time - Failure on the part of respondent to comply with terms of agreement - Appellant's right to purchase suitable accommodation for himself out of part payment affected - Respondent unwilling to perform his part of contract - Decree for specific performance cannot be granted."
28. In the last judgment cited by the learned counsel for the first respondent, it has been held :
    "After entering into an agreement with the vendee the vendor immediately entered into another agreement of sale of the land in dispute in favour of another person who had been impleaded as a party. No useful purpose would have been served thereafter to offer the entire sale consideration to the vendor and to call upon him to execute the sale deed in favour of the vendee. His intention not to do so per se was apparent on his entering into the latter agreement for a higher price. The only course open to the vendee was to straight away file the suit for specific performance of the contract. In those circumstances failure of the vendee to plead that he tendered the sale consideration amount to the vendor and called upon him to execute the sale deed in his favour, was not fatal to the suit particulars given in the forms attached to the Schedule in the C.P.C. to be mentioned in the plaint are only by way of guidance. Non-observance of such forms cannot in any manner deny the party the relief otherwise due under the law."
29. The learned counsel would then point out that the appellant is not only asking his brother to come forward to execute the sale deed but also one of the sons of the first respondent : that as per the stipulations of the agreement, the compensation has to be paid and the same has not been paid in full and hence the cross-objection. The learned counsel appearing for the first respondent, In his arguments, would basically stick to three points viz.
    (i) that the plaintiff has committed breach of contract,
    (ii) that the plaintiff has not come to the Court with clean hands and, therefore, he is not entitled to seek specific performance; and
    (iii) that when the first respondent has revoked the contract, he stated that he was not having the title but now he has come forward to say that he is ready to convince that he is having title and, therefore, he is not entitled to the equitable relief.
At this juncture, the learned counsel for the first respondent would cite a judgment of the Apex Court rendered in Lourdu Mari David v. Louis Chinnaya Arogiaswamy, reported in AIR 1996 Supreme Court 2814 wherein it has been held :
    "It is settled law that the party who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands. In other words, the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief."
30. Continuing to argue, the learned counsel for the first respondent would submit that the first respondent has made a counter claim : that the total damages claimed on his part is Rs. 1,50,000/- that the damage calculated on account of the breach comes to Rs. 1,79,000/-, but the Court has awarded only Rs. 49,898/- and hence the counter claim for Rs. 1,29,102/- under Section 73 of the Contract Act. On such arguments, the learned counsel appearing on behalf of the first respondent would ultimately pray to dismiss the appeal suit and allow the cross-objection with costs.
31. The learned senior counsel appearing on behalf of the subsequent purchasers i.e. respondents 2, 3 and 6 in A.S. No. 8 of 1988 would attempt to impress on the Court that they are bona fide transferees for value and without notice and, therefore, their interest has to be protected under law; that their purchase under Exs. A.14 and A.15 respectively dated 25-5-1984 and 26-5-1984 cannot be affected in terms of the finding rendered by the trial Court. At this juncture, emphasising the point that the party who is seeking to avail the equitable relief of specific performance must come to the Court with clean hands, the learned senior counsel would also cite the judgment reported in AIR 1996 Supreme Court 2814 (supra). Regarding Ex. A. 6 agreement, the learned senior counsel would also cite the larger bench judgment of the Apex Court reported in AIR 1998 Supreme Court 1742 (supra), which had been cited on the part of the first respondent and would lay emphasis to the proposition of law propounded therein that parties meant and made the time the essence of the contract and that the stipulation that is to be complied with has not been complied with on the part of the appellant and it works as a condition precedent.
32. The learned senior counsel would point out that it is not superimposed on terms of agreement : that failure would render the agreement incapable of being performed; that Rs. 50,000/- to be paid on 31-12-1982 has not been paid, which shows that the appellant has committed the breach of the contract and once there is breach of the conditions stipulated, the party is not entitled to specific performance; that on 30-12-1982, one day prior to the fulfilment of the condition making part payment, the plaintiff issued Ex. A. 7 telegram with the charge that there is encumbrance over the property on account of his brother and son being entitled to shares in the suit property; that the plaintiff also got the sale deed on 16-2-1983 from his brother and had filed the suit on 18-6-1983 suppressing the material facts and, therefore, the plaintiff is not entitled to the specific performance;
that under Ex. A.8 letter dated 5-1-1983, the first respondent terminated the contract and there is no ambiguity in his stand but in Ex. A. 10 letter dated 10-6-1983 there is no reference about his brother at all; that the evidence of P.W. 3, the stamp vendor, would falsify the theory of the genuineness of the purchase of the stamp papers: that when they found the lacuna in his evidence, he was later recalled and examined; that the appellant was not in possession of the properties so as to cost the onerous duty of making enquiry with the party in possession; that on evidence, the trial Court had come to the conclusion very rightly that these respondents arebona fide purchasers for value and without notice. On such arguments, the learned senior counsel would ultimately pray to dismiss the appeal with costs.
33. In consideration of the pleadings by parties, having regard to the materials placed on record and upon hearing the learned counsel for all excepting for respondent Nos. 4, 5 and 7 to 10 in A.S. No. 8 of 1988, who absented nor any representation made on their behalf, the points that surface for determination of the above appeal suit and the cross-objection are :
    1. Whether the lower Court is right in holding that the time is the essence of the suit contract made under Ex. A. 6?
    2. Whether the termination of the contract made under Ex. A. 8 by the first respondent is legal and binding in the circumstances of the case?
    3. Whether the lower Court is right in refusing to grant the specific performance sought for on the part of the appellant/plaintiff further justifying the subsequent sale held in favour of respondents 2 to 6 and the deceased Nizam Mohamed as bona fide purchase for value and without notice?
    4. Whether the lower Court is right in holding that the plaintiff is liable for damages to the extent of Rs. 1,00,000/- and whether the first respondent is entitled to the damages to the tune of Rs. 1,00,000/- besides forfeiture of the advance amount of Rs. 50,101/- as sought for by the first respondent in his cross-objection?
    5. What relief, the parties are entitled to?
Point No. 1 :
34. The suit has been filed on the part of the appellant herein, which is a partnership firm doing real estate business seeking the reliefs of specific performance of the suit agreement in Ex. A.6. dated 12-12-1982 and for delivery of possession of the suit properties or in the alternative seeking a direction to the first respondent to pay a sum of Rs. 3,00,000/- as compensation and for costs. As per the plaint averments, on the part of the appellant there is no denying of the recitals of Ex. A. 6 agreement to have been entered into in between the plaintiff and the first defendant for the purchase of the suit property for a total sale consideration of Rs. 3,50,000/- at the rate of Rs. 35,000/- per acre by the plaintiff and on payment of an advance amount of Rs. 50,101/-, the plaintiff agreed to part with a further sum of Rs. 50,000/- on or before 31-12-1982 and to pay the balance amount of Rs. 2,49,899/- on or before 12-6-1983 as a lumpsum and to get the sale deed executed in its favour by the first defendant or alternatively placing the plaintiff at liberty to purchase the same in piecemeal as one acre at a time at Rs. 35,000/- and in case the plaintiff fails to pay the entire amount on or before 12-6-1983 and to get the sale registered in his favour, as aforementioned, he shall forfeit the advance amount besides becoming liable to pay a sum of Rs. 1,00,000/- by way of damages in favour of the first respondent and that the said transaction to be fructified on measurement of the land and fixing the actual extent, which later came to be found as 8.20 acres.
35. However, on the part of the plaintiff, he would come forward to further allege that immediately after Ex. A. 6 agreement was entered into, he was reliably given to understand that the suit property was not free of encumbrance but the first defendant's brother one Sambandam and one of his sons have also right in the suit properties and, therefore, seeking clarification, to clear the cloud cast on the title and to receive the part payment of Rs. 50,000/- on 31-12-1982, as stipulated in the Ex. A.6 agreement, he issued Ex. A. 7 telegram to the first defendant. The grievance of the plaintiff is that the first defendant instead of either complying with the requirement of the plaintiff in clearing the encumbrance or even without clarification, charging the plaintiff with breach of contract and that he was not equipped with the required amount of Rs. 50,000/- so as to pay the same on 31-12-1982, abruptly terminated the agreement as per Ex. A. 8 letter dated 5-1-1983.
36. On the part of the plaintiff, it would be argued that when serious clouds have been cast on the very title to the suit properties, the first defendant is bound to satisfy him regarding his sound marketable title free from encumbrances and then to receive the next instalment amount of Rs. 50,000/-. The plaintiff would further allege that since the first defendant was only interested in protracting the matter beyond 12-6-1983, he issued a telegram dated 9-6-1983 calling for him to come to the Sub Registrar's Office to execute the sale deed on receipt of the entire balance consideration before the Sub-Registrar besides purchasing the stamp papers also on 10-6-1983 and waiting for the first defendant to arrive, but he never turned up to the Sub- Registrar's Office as required and that is the reason as to why the agreement was not able to be consummated into a sale deed. At this juncture, it is relevant to consider whether time is considered by parties to Ex.A.6 agreement the essence of the contract.
In order to get an answer to this question, one need not have to travel beyond Exs.A.6 to A.8 since they are only concerned with the time stipulated under Ex. A. 6 agreement. It is the case of the first defendant that for the next instalment of Rs. 50,000/- to be made before 31-12-1982, just one day prior to the said date, by Ex. A.7 telegram, the plaintiff sought to word off the encumbrance alleged therein and as a counter blast, the first defendant had revoked the very contract alleging breach of contract without being equipped with the required money of Rs. 50,000/- for the payment to be made on 31-12-1982 as per his letter in Ex. A.8. Therefore, the events that would follow thereafter either as contemplated under Ex.A.6 or in practice such as the further correspondence, notices, replies, paper publications, sale of the suit property by the first defendant in favour of the other defendants etc.are not quite relevant to arrive at a valid conclusion for the point whether time was considered by parties the essence of the contract entered into under Ex. A.6 agreement.
37. It is well setted that so far as the contract of immovable properties is concerned, time is not the essence of the contract. Of course, this dictum of law is subject only to two exceptions, the first one being that it should be stipulated in the contract itself that time is the essence of the contract so far as the agreement is concerned and the second one is that the party considering the time stipulated the essence of the contract should put the other party on notice specifying that time is considered the essence of the contract. Unless both these conditions are not complied with, the rule that time is not the essence of the contract so far as it is concerned with the immovable properties shall prevail.
38. In the light of the above proposition of law as propounded by the upper forums including the Apex Court, if the case in hand has to be dissected to the effect whether time was considered or intended by parties the essence of the contract, it should be mentioned that as in any other agreement, it is stipulated in the Ex.A.6 agreement also that besides the amount of Rs. 50,101/- parted with by the plaintiff as the advance amount on the very date of agreement, the plaintiff also should part with a further sum of Rs. 50,000/- on or before 31-12-1982 and that the entire contract to come to a close on payment of the full amount and getting the property registered in plaintiff's favour on 12-6-1983. But, as required by law, whether emphasis is made specifically stipulating therein that so far as the contract is concerned,time is the essence of the contract, it is not. Nor is there any notice issued on the part of the first defendant to the plaintiff laying emphasis that the time element is considered the essence of the contract. The lower Court has been under the miserable misconception of law that the moment the specific dates are mentioned for compliance of certain conditions such as to part with Rs. 50,000/- on or before 31-12-1982 and to complete the sale process purchase on payment of balance consideration before 12-6-1983 etc., time is considered to be the essence of the contract so far as the agreement in hand is concerned.
It should be mentioned that making a mention of these dates, parties have merely mentioned the time for compliance of certain conditions but the same cannot go to prove or establish that the said time specified therein has been considered the essence of the contract especially in view of the well settled proposition that time, so far as it is concerned with the sale of immovable property, is not the essence of the contract. Therefore, in order to indicate that time fixed in the contract is either taken or considered the essence of the contract by parties, the party which pleads time was considered the essence of the contract should comply with the conditions such as laying emphasis in the very agreement itself to the effect that time element in the agreement is considered the essence of the contract further putting the other side on notice to the said effect. Without following these conditions, time cannot be taken to have been considered the essence of the contract by parties.
39. It is relevant to note that even after Ex. A. 7 telegram having been issued by the plaintiff to the first defendant on 30-12-1982, the first defendant in his letter in Ex.A.8 dated 5-1-1983, which has been issued well after a week of Ex.A.7, has never made a mention to the effect in this vital document Ex.A.8 that time was considered the essence of the contract so far as Ex.A.6 contract is concerned and, therefore, till that stage, it could be safely concluded that parties did not consider time the essence of the contract so far as the Ex.A.6 agreement was concerned. Therefore, easy conclusion could be arrived at in answering the point No.1 whether time was considered the essence of the contract duly entered into by the plaintiff and the first defendant under Ex. A.6 agreement dated 12-12-1982 saying that time has not at all been considered by parties to the Ex.A.6 agreement, the essence of the contract.
40. So far as the judgments cited on the part of the learned counsel for the first respondent reported in AIR 1980 Delhi 188 is concerned, the learned Judge has held, to suit the facts of the case therein, that time was considered to be the essence of the contract since at the request of the vendee the period of ten days therein was not only stipulated for the payment of Rs. 98,000/- but also since the ten days time was again used in the agreement to qualify the period of ten days, the learned Judge would arrive at the conclusion that time was considered to be the essence of the contract therein. Such a situation is not prevalent in the case in hand and, therefore, this judgment does not become applicable to the facts of the case.
41. So far as the second judgment reported in AIR 1993 Supreme Court 1742 is concerned, it is admitted by the larger Bench of the Apex Court that there is no presumption as to time being the essence of the contract in the sale of immovable properties; that even if it is not the essence of the contract, the Apex Court says that the Court may infer that it is to be performed in a reasonable time under three circumstances, viz. (i) from the express terms of the contract, (ii) from the nature of the property and (iii) from the surrounding circumstances i.e. the object of making the contract and emphasis is laid on all the three circumstances.
Wheras in the case in hand, these circumstances do not exist at all nor has it been in any manner established on the part of the first respondent that these circumstances exist in the case in hand and, therefore, the conditions that existed to the facts of the case dealt with by the Apex Court are not the same conditions but different as it had been brought forth, in the foregoing paragraphs and, therefore, the proposition held therein also does not become applicable to the case in hand.
42. Regarding the judgment reported in AIR 1996 Supreme Court 1504, the condition is something different in the sense that based on the agreement entered into in between the vendor and the purchaser, the vendor based on the part payment promised to be parted with within a stipulated time on the part of the purchaser had entered into an agreement to purchase suitable accommodation and on failure to comply with making the part payment as agreed upon, the Court would decide that the respondent therein is unwilling to perform his part of contract and, therefore, specific performance cannot be granted. Such a situation, based on facts,does not at all exist in the case in hand and, therefore, the proposition held therein is also not applicable to the facts of the case in hand.
43. So far as the last judgment cited by the learned counsel for the first respondent from AIR 1992 Punjab and Haryana 153 is concerned, this proposition also is not in any manner connected to the facts of the case and, therefore, become inapplicable.
44. For all the discussion held above, this point has to be answered in the negative that time was never considered the essence of the Ex.A.6 contract by the parties thus answering this point in favour of the appellant and against the respondents.
POINT NO 2 :
45. So far as this point whether the termination of Ex.A.6 agreement by the first defendant as per his letter in Ex.A.8 dated 5-1-1983 is proper and valid is concerned since an answer has been given to point No.1, source has to be drawn only from the arguments and the discussions held for the first point so as to conclude that time was not considered the essence of the contract dated 12-12-1982 under Ex.A.6. when time was not considered by parties the essence of the contract, since the subject-matter is an immovable property, thus strictly adhering to the legal proposition well settled, it goes without saying that over and beyond 12-6-1983, three more years are there for the parties to perform their parts of contract and to see that the agreement fructifies into the sale deed. Therefore, easy conclusions could be arrived at saying that termination of the contract under Ex.A.6 dated 12-12-1982 by the first defendant as per his letter in Ex. A.8 dated 5-1-1983 is neither legal nor acceptable.
46. It may be remembered that not on lame excuses the appllant issued the telegram in Ex. A.7 dated 30-12-1982 but on strong grounds that he was reliably given to understand that the first defendant's brother Sambandam and one of his sons have vital interests in the suit properties and there is nothing wrong on the part of the appellant in seeking to clarify and clear the encumbrance, if any, which could normally occur in such agreements and, therefore, the appellant is perfectly right in issuing Ex.A.7 telegram with the averments thereon and it is the bounden duty cast on the first respondent to have cleared the doubts or even the encumbrance if any therein. But on the contrary, the first respondent has gone to the extent of terminating the very agreement itself on lame excuses such as that the appellant was not equipped with the instalment amount of Rs. 50,000/- etc. which cannot be accepted since it is a partership firm consisting of four partners and they have started only contributing the substantial amount towards constitution of the partnership firm which is disclosed as per Ex.A.1 and, therefore, neither the reason assigned on the part of the first respondent nor the very act of terminating the contract itself abruptly is in no way acceptable. No proper reason or ground exists on the part of the first defendant to terminate the contract itself on seeking clarification on the title of the suit property by the purchaser who is prepared to pay a lumpsum on it.
47. The other reason attributed regarding the timing of Ex.A.7 telegram having been issued a day before the remittance of Rs. 50,000/- should be made creating motives to the appellant also is not acceptable for the reasons aforementioned. On any day if a party is given to understand reliably that there are some vital encumbrances, he would chose that date to issue the telegram or at the earliest and, therefore, issuing of the telegram a day before 31-12-1982 cannot be taken as a motive for not getting ready nor willing to perform his part of contract.
48. For all these discussions, it has to be held that the termination of Ex. A. 6 contract under Ex. A. 8 by the first respondent herein is neither legal nor binding on the appellant in the circumstances of the case. This point is answered accordingly.
Point No. 3 :
49. The third point whether the lower Court is right in refusing to grant the relief of specific performance is concerned, it had wasted much of its time in finding out whether the plaintiff was, on 30-12-1982, capable of managing Rs. 50,000/- which cannot be ascertained unless the sources of the partners of the plaintiff are exhausted. Merely taking into consideration the materials placed before the Court for other purposes, this fact cannot be ascertained and the conclusions arrived at by the lower Court to the effect that the plaintiff was not equipped with the said amount of Rs. 50,000/- so as to pay the same on 31- 12-1982 is wrong. There is no denying of the dispute that was prevalent in between the first respondent and his brother Sambandam. Even the lower Court has brought out many instances in this regard.
50. The Court below has given credence to the evidence placed on the part of the first respondent to the effect that the said Sambandam was given in adoption to his senior paternal uncle Chellappan but still claiming the family properties and had instituted the proceedings including one to dismiss the Succession Certification application filed by the first respondent regarding the amount of Rs. 17,000/- after the death of their father Saminathan as it comes to be seen from Ex. B.4 the reject order passed by the Court in the interlocutory Application filed by Sambandam in the said Succession O.P. While such close legal encounters were going on in between the first respondent and his brother Sambandam, which is an admitted part of the case by the lower Court, it has not thought it reasonable on the part of the appellant to have believed the version of Sambandam that he had a share in the family property.
51. Moreover, it is an open secret that while selling the properties to the subsequent purchasers, the first respondent's son is also a party to the sale and, therefore, it is a point in favour of the appellant that his son had sufficient interest in the suit property.
Therefore, there is nothing wrong on the part of the appellant to have sent Ex. A. 7 telegram to the first respondent seeking to ward off the encumbrance concerning Sambandam and his son. Such genuine encumbrances brought forth could either be cleared or if there is no encumbrance in the property, the same could be clarified on the part of the first respondent instead of jumping to the conclusion to terminate the very contract as he had resorted to under Ex. A.8 termination letter dated 5-1-1983. Without considering these main aspects in a broader spectrum and on an overall consideration of the entire facts and circumstances in an integrated manner so as to arrive at proper conclusions, the lower Court seems to have gone into minor aspects and has appreciated the evidence in a truncated manner which is not desirable nor could be expected in cases of this nature. From all these facts and circumstances, no mala fide intention on the part of the appellant is seen anywhere. Unless fraud on the part of the appellant is proved, there is no room, in law, to terminate the agreement or to refuse specific performance in favour of a party, who is still willing to perform his part of the contract.
52. Coming to the next part of this point regarding the subsequent sale of the suit properties in favour of respondent Nos. 2 to 6 and the deceased Nizam Mohamad under Exs. A. 14 and A -15, it is fantastic,unbelievable but relevant for consideration since the property which has been agreed to be sold for a sum of Rs. 3,50,000/- in favour of the appellant has been sold for an amount of Rs. 61,000/- and, therefore, no further evidence need be necessary for the subsequent sale to have been taken as sham and nominal.
While so many transactions are going on including paper publications, it cannot also be said that the purchasers therein were not aware of the earlier agreement in Ex.A.6 nor did they have any other information to the said effect. This part of the case relating to the subsequent sale or purchase by the respondent Nos.2 to 6 and the deceased Nizam Mohamad under Exs.A.14 and A.15 respectively dated 25-5-1984 and 26-5-1984 have neither been discussed properly nor answered in the manner expected by law by the lower Court.
53. Moreover, it further comes to be known that the subsequent purchasers had sufficient time to enquire prior to getting the sale deed registered in their favour but they do not seem to have made such genuine enquiries in and around the area where the property locates and the parties reside and it is the legal maxim "CAVEAT EMPTOR" which would apply to the case in hand. It is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to be property to be purchased prior to committing in any manner and hence they cannot simply come forward to put up the general plea that they are the bona fidepurchasers for value and without notice especially when the purchase is not for the proper value, which would only indicate sham and nominal. This point is answered accordingly.
POINT NOS. 4 AND 5:
54. In all probabilities, it is a definite case wherein legally specific performance should have been ordered in favour of the plaintiff by the lower Court. Since there was sufficient time for performance of the contract left within law, it was wrong on the part of the first respondent to have terminated the contract under Ex.A.8 letter and later did not cooperate to fructify the same and ultimately even create sham and nominal sale deeds in the names of respondents 2 to 6 and the deceased Nizam Mohamad as per Exs.A.14 and A.15. Therefore, it has to be mentioned that even while doing the subsequent sale, Ex. A. 6 contract was in force having sufficient time for execution of the sale deed in favour of the appellant and the first respondent could not have either terminated the contract or refused to sell the same in favour of the plaintiff or even agreed to sell the suit properties in favour of respondent Nos.2 to 6 and the deceased Nizam Mohamad and, therefore, it is a case wherein the lower Court should have ordered specific performance which the plaintiff is legally entitled to.
55. While such being the relief that should have been granted in the suit filed by the plaintiff/appellant, the lower Court has not only denied the relief of specific performance but also unreasonably has granted the damages to the tune of Rs. 1,00,000/- which cannot be done in cases of such nature as though the default on the part of the plaintiff had been pinpointedly proved. But, on facts and regarding the proposition of law, it is different in this case wherein without following the legal requirements on the subject, the first respondent has acted in an arbitrary manner either in terminating the Ex.A.6 contract without any genuine reason but on false and untenable grounds or in selling the suit properties in favour of respondent Nos.2 to 6 and the deceased Nizam Mohamad and, therefore, the case as put up by the respondents cannot be legally sustained.
56. The Court below without having any idea or discussion held on the legal proposition on the subject, simply giving a literal meaning to the recitals of Ex.A.6 and appreciating the evidence accordingly has arrived at erroneous conclusions to not only refuse specific performance in favour of the plaintiff but also to allow damages to the tune of Rs. 1,00,000/- against the plaintiff which is erroneous and uncalled for. These points are answered accordingly.
In result,
    (i) the Appeal Suit No. 8 of 1988 succeeds and the same is allowed setting aside the judgment and decree dated 7-10-1987 rendered in O.S.No 86 of 1985 by the Court of Subordinate Judge, Pudukkottoi.
    (ii) The suit in O.S.No. 86 of 1985 on the file of the Court of Subordinate Judge, Pudukkottai is hereby decreed granting the relief of specific performance of the contract dated 12-12-1982. The respondents 1 to 6 and the legal representatives of the deceased Nizam Mohamad i.e. respondents 7 to 10 are hereby directed to execute the sale deed in favour of the appellant/ plaintiff and put him in possession of the suit properties.
    (iii) For the conclusions arrived at in the Appeal Suit, the Cross-objection No. 116 of 1996 is dismissed as not having any bearing on this appeal.
    (iv) For the reasons assigned in the Appeal Suit, the C.M.P.No 7900 of 2001 is also dismissed.
However, in the circumstances of the case, there shall be no order as to costs.
Order accordingly.
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