Friday, 28 October 2016

How to ascertain that time was essence of contract in suit for specific performance of contract?

 Another accept is to be considered in the present case is that where time is the essence of the contract, failure to stick to the time disentitles the defaulter to seek specific performance. However, the question whether time is the essence of the contract has to be decided not only with reference to the terms of the contract but also with reference to the conduct of the parties and the facts and circumstances of the case. Thus, where time is the essence of the contract is an inference from proved facts and is therefore a question of law. (Sriram Cotton Pressing Factory v. Narayanasamy, MANU/TN/0270/1965 : AIR 1965 Mad 352). Where a contract relates to sale of an immovable property, it will normally be presumed that time is not the essence of the contract. As held by the Supreme Court in the case of Gomathinayagam Pillai v. Palanisamy Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868, where the fixation of period within which the contract has to be performed does not make a stipulation as to time as the essence of the contract.
whether time is essence of the contract, the said section reads as under:
"55. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of essence of the contract.
If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.
71. From perusal of above section, the position which emerges out is that the above section deals with the effect of failure to perform the promise at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale-deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale-deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract.
72. The legal position on the point in issue is clear from the decision of a Constitution Bench of Hon'ble the Apex Court in the case of Chand Rani v. Kamal Rani, MANU/SC/0285/1993 : (1993) 1 SCC 519, held as under:
"It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language."
73. Hon'ble the Apex Court in the case of N. Srinivasa v. Kuttukaran Machine Tools Ltd., MANU/SC/0265/2009 : (2009) 5 SCC 182, held that in the contract relating to immovable property, time cannot be the essence of the contract", the appellant put forth the contention that in all contracts relating to sale of immovable property, time stipulated for performance, even if expressed to be the essence, has to be read as not being the essence of the contract and consequently the contract does not become voidable by the failure to perform before the specified time. A careful reading of the said decision would show that the sentence relied on (occurring in para 31) apparently was not the statement of legal position, but a conclusion on facts regarding the contract that was being considered by the Court in that case, with reference to its terms. In fact the legal position is differently stated in para 27 of the said decision:
"In a contract for sale of immovable property, normally it is presumed that time is not the essence of the contract. Even if there is an express stipulation to that effect, the said presumption can be rebutted. It is well settled that to find out whether time was the essence of the contract, it is better to refer to the terms and conditions of the contract itself."
74. Taking into consideration the earlier judgment on the point in issue, Hon'ble the Apex Court in the case of Saradamani Kandappan v. S. Rajalakshmi and others, MANU/SC/0717/2011 : (2011) SCC 18, in para 26 held as under:
"Relying upon the earlier decisions of this Court in Gomathinayagam Pillai v. Palaniswami Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868 and Govind Prasad Chaturvedi v. Hari Dutt Shastri, MANU/SC/0010/1977 : (1977) 2 SCC 539, held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. Thereafter, this Court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time: (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances as, for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land."
75. Thus, from the above said facts, that time is presumed not to be of essence of the contract relating to immovable property, but it is of essence in contracts of re-conveyance or renewal of lease. The onus to plead and prove that time was the essence of the contract was on the person alleging it, thus giving an opportunity to the other side to adduce rebuttal evidence that time was not of essence. That when the plaintiff pleads that time was not of essence and the defendant does not deny it by evidence, the Court is bound to accept the plea of the plaintiff. In cases where notice is given making time of the essence, it is duty of the Court to examine the real intention of the party giving such notice by looking at the facts and circumstances of each case. That a vendor has no right to make time of the essence, unless he is ready and willing to proceed to completion and secondly, when the vendor purports to make time of the essence, the purchaser must be guilty of such gross default as to entitle the vendor to rescind the contract.
IN THE HIGH COURT OF ALLAHABAD (LUCKNOW BENCH)
First Appeal No. 39 of 1978
Decided On: 16.04.2014
Syed M.M. Rizvi
Vs.
Subhash Singh
Hon'ble Judges/Coram:Anil Kumar, J.
Equivalent Citation: 2014(5)ADJ111, 2014 6 AWC5751All, 2014 124 RD679

1. Heard Shri Jaspreet Singh, learned counsel for the appellant No. 1/1 and Shri Hari Om Singh, learned counsel for the respondent and perused the record. Controversy involved in the present case is that Sri Syed Mohd. Mutahir Rizvi (now deceased) in the capacity of General Agent/power of Attorney Holder of the other appellants/defendants/co-owners, namely, Syed Mohd. Tahir Rizvi, Smt. Kahrim Nisan, Akhtarun Nisan, entered into an agreement dated 6.5.1974 with Sri Subhash Singh/plaintiff (now deceased) for selling of a house situated in Lakhipur City, Mohalla Nai Basti, Near Sadar Chauraha in which City Post Office is a tenant (hereinafter referred as the premises) bounded as under:
East-House of Smt. Raj Rani W/o. Gurbachan Singh
West-Main Road
North-Kharanja Road
South-Rental House of Keshav Company
2. While entering into an agreement for sale dated 6.5.1974 in respect to premises with plaintiffs/respondents, the appellants agreed to sell the same for Rs. 62,000/- out of which Rs. 7,000/- was paid as earnest money.
3. According to the terms of the agreement, the appellants/defendants had to apply for permission to District Magistrate. for transfer of the immovable property situated in the urban limits as at the relevant point of time, it was necessary to obtain the permission for transfer of the property situated in urban area from District Magistrate.
4. Further, as per the terms of the agreement necessary parvi to get the permission had to be done by the plaintiff/respondent (Subhash Singh) with the cooperation of the defendants and sale-deed to be executed within eight months after obtaining permission. In case permission was not obtained, the defendants/appellants were at liberty to forfeit earnest money but at the same time they have to offer their full cooperation in that direction, as per clause/item No. 5 of the agreement if due to some discrepancy on behalf of the appellants/defendants sale for consideration is refused, earnest money would be refunded. Clause-IV and V/Item of the agreement are quoted herein below:
5. As per the said clause of the agreement, an application has been moved by the appellants/defendants in order to get the permission for sale of the premises to the District Magistrate, Lakhimpur Kheri through counsel and parvi in respect of the said act has been done by the plaintiff/respondent.
6. On 22.7.1974, a letter was sent from the office of the District Magistrate, Lakhimpur Kheri through counsel to the appellant/defendant/Shri Syed Mohd. Mutahir Rizvi through counsel inter alia stating therein about the requirements which has to be done within 15 days in order to get the permission for transfer of the premises. Thereafter, the plaintiff/respondent has sent an information to the defendant/appellant No. 1 to carry out his part of obligation as per the letter dated 22.7.1974, however, no steps were taken. So on 16.8.1974, District Magistrate had rejected the application for grant of permission.
7. Thereafter, plaintiff/respondent sent a letter as well as his father/Sri Havili Ram to defendant/appellant No. 1/Sri Syed Mohd. Mutahir Rizvi who resides at Balrampur with a request to come to Lakhipur in order to perform the legal obligations required to be done in order to obtain the permission for transfer of the house subject-matter of the agreement, Sri Syed Mohd. Murthir Rizvi assured that he will come to Lakhimpur for the said purpose but did not keep his promise in spite of the best effort made on behalf of plaintiff to get permission for the execution of the sale-deed as per the terms of the agreement.
8. On 15.12.1975, plaintiffs/respondents wrote a letter in this regard, replied by defendant/appellant No. 1/Sri Syed Mohd. Murthir Rizvi on 3.1.1976 that as per the terms of the agreement, eight months has lapsed as such the earnest money has been forfeited. However, on 20.1.1976, plaintiff wrote a letter for execution of the sale-deed but refused by the defendant No. 1. In view of the said background, a registered notices ware sent by the plaintiff to the defendants on 30.4.1976, 11.9.1976 and 11.10.1976 for the purpose of execution of the sale-deed but his efforts were in vain as no heed has been paid.
9. Accordingly, plaintiff/respondent (Subhash Singh) filed a suit for specific performance of contract in alternative he has prayed for refund of his earnest money along with Rs. 25,000/- as damages. The said suit was registered as Original Suit No.: 37 of 1997 (Subhash Singh v. Sri Syed Mohd. Murthir Rizvi and 3 others) in the Court of Additional District Judge, Lakhimpur.
10. In the said matter, the defendants/appellants filed a written statement, inter alia, taking a defence that the plaintiff/respondent failed to do proper parvi as per the terms of the agreement, thus, he has relinquished the contract and was only keen to get his earnest money refunded but as the time of eight months have expired so as per the terms of the agreement, defendants have forfeited the earnest money, hence the suit filed by the plaintiff is liable to be dismissed.
11. In the additional pleas taken by the defendants/appellants in their written statement, a defence was also taken that the defendants/appellants who are farmer/cultivator are in need of a tractor immediately, so they decided to sale the disputed house and the agreement has been entered between the parties and as per the terms of the agreement, the sale-deed must be executed within eight months from the date of execution of the agreement because the defendants/appellants were in need of money, so time is the essence of the contract and the plaintiff/respondent had not done the parvi for the reasons for which he himself is responsible in jail from 4.8.1974 to October, 1974, keeping in view the said fact and taking into consideration that the agreement to sale was contingent contract having necessary conditions that within eight months permission to sale of the house ought to be obtained from the District Magistrate, Lakhimpur Kheri and the plaintiff/respondent failed to do so, hence the contract has come to an end, became void and under this circumstances plaintiff is not entitled for any relief, suit filed by him liable to be dismissed.
12. The Court below in order to decide the controversy involved in Original Suit No. 37 of 1977 (Sri Subhash Singh v. Syed Mohammad Mutahir Rizvi and three others) had framed the following issues:
1. "Whether the plaintiff has always been ready and willing to perform his part of contract? If not its effect?
2. Whether the conditions about obtaining permission from the authority concerned to sell the disputed building within eight months as stipulated in agreement deed dated 6th, May 1974 was an essential part of duty of the plaintiff, which must have been performed within stipulated time? If so its effect?
3. Whether the time was the essence of the contract? If so its effect?
4. Whether the defendants are entitled to forfeit their earnest money as alleged in their W.S.?
5. Whether the plaintiff is entitled to claim his specific performance of the contract as alleged?
6. To what relief, if any, is the plaintiff entitled?
7. If specific performance of the contract is not possible, whether plaintiff is entitled to claim any damages? If so at what rate and upto what extent?
8. Whether the nature of the contract between the parties was a 'contingent contract' as pleaded in para 28-B of the W.S. And as the permission to sell was not obtained within eight months, contract stood frustrated? If so its effect?"
13. So far as the issue Nos. 2, 3 and 8 are concerned, they have been decided together by the Court below and the finding given in respect to the said issues are to the effect that "thus, I sum up my entire aforesaid discussion and arrive at a definite conclusion that the contract between the parties was not a contingent contract. I hold that the time was not of the essence of the contract and the parties are bound by the agreement as it is Issue No. 3 is decided in its negative. Issue Nos. 2 and 8 are decided against the defendant respectively."
14. So far as the issue No. 1 is concerned, the Court below has given a finding that the plaintiff was always ready and willing to perform his part of contract. Issue No. 4 has been decided in favour of the plaintiff by the Court below holding that the defendant are not entitled to forfeit the earnest money and they are bound by the agreement and to execute the sale-deed of disputed house in favour of the plaintiff.
15. Further, the issue Nos. 5 and 6 were also decided in favour of the plaintiff by the Court below holding that the plaintiff is entitled to succeed in his claim for relief of specific performance of contract of the disputed house, accordingly, by means of judgment and decree dated 9.3.1978, the Court below has decreed the suit of the specific performance filed by the plaintiff, the operative portion of the same reads as under:
"Plaintiff's suit for the specific performance of the contract in respect of the disputed building, described in para 1 of the plaint is hereby decreed with cost as prayed. Defendants are directed to execute the sale-deed of the disputed house in favour of the plaintiff within six months from today, after receiving the balance consideration of Rs. 55,000/- (Rs. Fifty five thousand) from the plaintiff. In case of default plaintiff would be at liberty to get the sale-deed executed through Court according to law."
16. Aggrieved by the decree dated 9.3.1978, the present appeal has been filed before this Court.
17. Thereafter, by order dated 27.10.1987, the same was dismissed for want of prosecution. Subsequently, the said order has been recalled.
18. Again on 14.11.2000, this Court has passed an order, on reproduction reads as under:
"Case called on for hearing repeatedly. Neither the counsel for the appellant appeared, despite repeated calls, to press the Appeal. The First Appeal is dismissed accordingly. Interim order, if any, stands vacated."
19. After passing of the order dated 14.11.2000, plaintiff (Subhash Singh) moved an application before the Court below for execution of the judgment and decree dated 9.3.1978 passed by Vth Additional District Judge, Lakhimpur in Original Suit No. 37 of 1977 and praying therein for execution of the sale-deed. On the said application, notices were issued to the defendants/appellants by the Court concerned, however, no objection has been filed by them. So, the Court below in pursuance to the judgment and decree dated 9.3.1978 had executed the sale-deed on 16.4.2001.
20. Thereafter, on 3.8.2001, an application for recalling of the order dated 14.11.2000 along with the condonation of delay has been moved on behalf of the defendants/appellants.
On 27.8.2001, this Court has passed a following order:
"Heard the appellant on the application for restoration of the order dated 14.11.2000 dismissing the appeal in default.
Ground shown for absence seem sufficient.
The application is allowed. The appeal is restored to its original number.
List the appeal."
21. After passing of the order dated 27.8.2001, an application was moved on behalf of the plaintiff/respondent (Subhash Singh) for recall of the said order.
22. In addition to the said facts, during the pendency of the present appeal, the appellant No. 1/Syed Mohd. Tahir Rizvi died, as such, an application for substitution was moved by Shri Raza Hasnain one of the legal heir of the deceased (Syed Mohd. Mutahir Rizvi) to implead as him, Abbasi Bano and Anjum Zehra as legal heirs of the deceased (Syed Mohd. Mutahir Rizvi).
23. On 23.7.2003, this Court has passed the following order:
"Heard Sri Jas Preet Singh and Shri Hari Om Singh for the parties.
After hearing the parties, we allow the application filed by one Sri Raza Hasnain, legal heir of Syed Mohammad Mutahir Rizvi. In the circumstances indicated in the affidavit, we restore the case to its original number as far as Raza Hasnain is concerned.
It is clarified that we have restored this case only as far as Raza Hasnain is concerned. Consequence with regard to Syed Mohammad Mutahir Rizvi, who is a proforma party, shall be considered at the time of hearing.
Sri Jas Preet Singh, learned counsel for newly substituted appellant prays for and is allowed one week time to carry out the amendment and he is allowed further two weeks' time for filing paper book.
List immediately thereafter for final hearing in the next month."
24. On 28.1.2007, the plaintiff/respondent (Subhash Singh) died, as such, an application for substitution has been moved by appellant No. 1/1 in order to bring his legal heirs on record which are as under:
"1/1 Smt. Surendra Kaur Juneja, wife of late Shri Subhash Singh.
1/2 Shri Trilochan Singh, son of late Shri Subhash Singh.
1/3 Shri Gurjeet Singh, son of late Shri Subhash Singh.
1/4 Shri Surendra Singh, son of late Shri Subhash Singh.
1/5 Smt. Simmi, wife of Pammu, D/O late Shri Subhash Singh, C/O Sankalp Automobiles, Katcheri Road, Near Allahabad Bank, Lakhimpur Kheri.
1/6 Smt. Vimmi Devi, late Shri Subhash Singh.
1/7 Smt. Rishi, D/O late Shri Subhash Singh."
25. On 1.4.2010, the same was allowed. The legal heirs/representatives of deceased (Subhash Singh were brought on record.
On 7.4.2010, an order was passed, on reproduction reads as under:
"Attention has been drawn to the fact that valuation of first appeal is only of Rs. 62,000/-. Hence, it is cognizable by Hon'ble Single Judge of this Court.
In view of the above, list before the Hon'ble Single Judge for peremptorily hearing in first five cases of the cause list on 19.4.2010."
26. Thereafter, on 27.2.2012, on behalf of the Raza Hasnain/appellant No. 1/1, an application under Section 151 C.P.C. has been moved with the following prayer:
"Wherefore, it is most respectfully prayed that in view of the above mentioned facts and circumstances this Hon'ble Court may very kindly graciously be pleased to pass an appropriate orders in light of the above mentioned facts and circumstances and permit the appeal as a whole to be heard as prayed in para 23 above, for which act of kindness, the appellants shall for every pray."
27. Paragraph No. 23 of the said application is being reproduced reads as under:
"That the said application has not been disposed which also needs to be decided. Therefore, in the above backdrop of facts and circumstances where the parties are already on record in any capacity before the Court it cannot be said that the array of parties is defective or that it could enure to the benefit of only one persons, hence in light of the facts and circumstances it is most respectfully prayed that this Hon'ble Court may very kindly graciously be pleased to pass an appropriate orders in the ends of justice to permit the appellants Raza Hasnain, who is also being taking care of the interest and shares of the remaining appellants and the order dated 23.7.2000 may kindly be read down/modified/reviewed/recalled to the effect that the appellants are entitled to urge the entire appeal on merits and not qua one appellant as suggested by the contesting respondents."
28. On the said application, on 27.2.2012, an order was passed, on reproduction reads as under:
"This is an application for recalling the order dated 23.7.2003.
I have perused the application and reasons given therein. The reasons given are not convincing. The impugned order was passed on 23.7.2003.
When the final hearing of the case has started, this application has been moved. Apart from this, learned counsel for the appellant has also drawn the attention of the Court towards Order 41 Rule 4 CPC. Therefore, the application moved at the stage of final hearing cannot be allowed. The other pleas which are available to the appellant, as may be provided under law can be taken and are open to raise.
The application is accordingly rejected."
29. In view of the above said factual background, Shri Jaspreet Singh, learned counsel on behalf of the Raza Hasnain/appellant No. 1/1, Shri Hari Om Singh, learned counsel on behalf of the plaintiff/respondent have made their submission.
30. Shri Jaspreet Singh, learned counsel for the appellant No. 1/1 submits that in view of the agreement dated 6.5.1974, it has been agreed that the premises in question shall be sold for consideration of Rs. 62,000/- out of which Rs. 7,000/- was given as earnest money.
31. He further submits that as per the terms of the Clause 4 and 5 of the agreement, time is essence of the contract and for transfer/sale of the premises, necessary permission is to be sought from the District magistrate, Lakhimpur Kheri for which parvi is to be done by Shri Subhash Singh as well as necessary affidavit/documents is to be given by the defendants/appellants and after a period of eight months, the permission has not given, due to negligence on the part of the plaintiff/respondent (Subhash Singh), the earnest money has been forfeited as per the term of the agreement.
32. In order to elaborate his submissions, Shri Jaspreet Singh, learned counsel for the appellants vehemently argued that Subhash Singh was in jail from 4.8.1974 to October, 1974 and permission was not obtained from the District Magistrate as no parvi has been performed by him which is to be done by the plaintiff/respondent as per the terms of the agreement dated 6.5.1974 as a result of which permission was rejected. So, in view of the above said facts, the appellants/defendants had forfeited the earnest money. From the said circumstances, it is apparently cleared on the face of the case, amply proved that the plaintiff/respondent abandoned the contract and was not at all ready and willing to perform his part of the contract and due to failure of the plaintiff to perform his part of the contract within the stipulated period of eight months disentitled him to claim the equitable relief of the specific performance.
33. Thus, keeping in view the said facts as well as time is essence of the contract, the suit filed by the plaintiff/respondent (Subhash Singh) for specific performance is liable to be dismissed as he has failed to comply the requirement of Section 16 of the specific performance Act and no decree should be passed. So, the judgment and decree dated 9.3.1978 passed by Vth Additional District Judge, Lakhimpur in Original Suit No. 37 of 1977 being contrary to the facts, liable to be set aside.
34. In support of his argument, Shri Jaspreet Singh, learned counsel for the appellants has placed reliance on the following judgments:
1. Pushpa Rani S. Sundaram v. Pouline Manomani James, MANU/SC/2493/2000 : 2002(9) SCC 582
2. Data Rao and another v. Ram Rao and others, 2000(1) JCLR 289 (SC)
3. K. Narendra v. Riviera Apartments, MANU/SC/0392/1999 : 1999(2) JCLR 755 (SC)
4. K.S. Vidyanandam v. Vairavan, MANU/TN/0069/1996 : 1997 SAR 307
5. His Holyness Archarya Swami Ganesh Das Ji v. Mr. Sitaram Thapar, 1996 SAR 614
6. Kashi Ram v. Om Prakash Jawal, MANU/SC/2149/1996 : 1996 SAR 527
7. N.P. Thirugnanam v. Dr. R. Jagan Moha, MANU/SC/0025/1996 : 1995(5) SCC 115
8. Deoka Bai v. Uttam, MANU/SC/0560/1993 : 1993(4) SCC 181
9. Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates Private Limited and another, 2011(9) SCC 147
10. Saradamani Kandappan v. S. Rajalakshmi and others, MANU/SC/0717/2011 : 2011 SAR (Civil) 630
11. Man Kaur (Dead) by Lrs. v. Hartar Singh Sangha, MANU/SC/0789/2010 : 2010(10) SCC 512"
35. Another argument advanced by Shri Jaspreet Singh, learned counsel for the appellants is that in any case as per terms of the agreement/clause V, due to any discrepancy, permission was refused by the District Magistrate for transfer of the premises in question then in that circumstances the plaintiff/respondent (Subhash Singh) is entitled for refund of the earnest money. So, keeping in view the said facts as well as the prayer which has been made by the plaintiff/respondent in its plaint that compensation of Rs. 25,000/- +expenses along with Rs. 7,000/- may be refunded back and should have been allowed by the Court below rather decreeing the suit for specific performance, thereby directing to execute the sale-deed is in an action contrary to the provision of Section 16 and 20 of the Specific Relief Act and as per the said section, a discretionary relief should not have been granted in view of the facts and circumstances of the case.
36. Shri Hari Om Singh, learned counsel for the plaintiffs'/respondents, in rebuttal, submits that in the present case, as per the terms of the agreement dated 6.5.1974, the defendants/appellants/vendors had to move an application in order to get the permission from the District Magistrate for transfer of the property and the plaintiff/respondent had to do parvi to get the permission but the vendors had failed to perform their part of the contract. And after issuance of letter dated 22.7.1974, from the office of District Magistrate, certain formalities as mentioned to be completed/done within 15 days. The said facts has been informed by the plaintiff/respondent to the appellant No. 1/Syed Mohd. Muthir Rizzvi through telegram dated 23.7.1974. Thereafter, on 24.7.1974, appellant No. 1 has written a letter to the plaintiff/respondent (Subhash Singh), on reproduction reads as under:
37. In spite Sri Syed Mohd. Mutahir Rizvi did not perform his part arising out of the contract. So, keeping in view the provisions as provided of Section 37 of the Indian Contract Act, 1872 which reads as under:
"The parties to a contract must either perform, or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law.
Promises bind the representative of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract."
38. So, in the present case, time is not essence of the contract because the vendors/defendants have failed to perform their part arising out of the agreement dated 6.5.1974. In support of his arguments, he has placed reliance on the following judgments:
"1. Govind Lal Chawla v. C.K. Sharma and others, MANU/UP/0109/1978 : AIR 1978 All 446
2. Veeraswami and Kunhamed Kutti, AIR 1966 Madras 46 (V 53 C18)"
39. He further submits that in view of the provisions as provided under Section 66 of the Contract Act which reads as under:
"The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal."
40. As after expiry of the contract period, the appellants/defendants had not revoked the agreemen. So, keeping in view the said facts, time is not essence of the contract and no illegality or infirmity done by the Court below in passing the decree dated 9.3.1978 for specific performance.
41. Shri Hari Om Singh, learned counsel for the plaintiff/respondent also submits that in view of the order dated 23.7.2003 passed by this Court, on an application moved by Shri Raza Hasnain/appellant No. 1/1, the appeal has been restored only so far as Raza Hasnain is concerned. Thus, keeping in view the said facts, appeal in question stood dismissed against the rest of the appellants/defendants and accordingly, decree dated 9.3.1978 passed by the Court below against them is confirmed. In view of the above said facts, Raza Hasnain who is substituted as legal heir of deceased (Syed Mohd. Mutahir Rizvi) in the present appeal, can argue the matter only to the extent of his share (1/12 share) in the premises. Keeping the said facts as well as the fact that when the appeal was dismissed for want of prosecution by order dated 14.11.2000 on an application moved by the plaintiff/respondent before the Court below for execution of the judgment and decree dated 9.3.1978 passed by Vth Additional District Judge, Lakhimpur in Original Suit No. 37 of 1977. Notices were issued to the appellants/defendants, but they did not file any objection and the Court below had executed the sale-deed in favour of the plaintiff/respondent on 16.4.2001. Hence, the present appeal does not survive any more, liable to be dismissed.
42. Shri Jaspreet Singh, learned counsel for the appellant No. 1/1 while rebutting the said argument submits that even if in pursuance to the order dated 23.7.2003, the appeal is dismissed against the remaining defendants/appellants but the same will not be illegally impediment in the way of the appellant No. 1/1(Raza Hasnain) to challenge the decree in question in view of the provisions as provided under Section 144 C.P.C.
43. He further submits that as the appeal has been restored, so the appellant No. 1/1 can challenge the decree dated 9.3.1978 on the ground that time is essence of the contract for specific performance as per the agreement dated 6.5.1974 so sale-deed executed by the Court below on 16.4.2001 is nullity and void in view of doctrine of lis pendens /Section 52 of the Transfer of the Property Act read with Section 144 C.P.C. and Order 41 Rule 33 C.P.C. In support of his arguments, he has placed reliance on the following judgments:
"1. Sital Parshad and another v. Kishori Lal, MANU/SC/0013/1967 : AIR 1967 SC 1236
2. Smt. Ram Peary and others v. Gauri and others, MANU/UP/0083/1978 : AIR 1978 All 318
3. U. Nilan v. Kannayyan (Dead through Lrs.), MANU/SC/0637/1999 : 1999(8) SCC 511
4. Neelathupara Kummi Seethi Koya Phangal (Dead) By Lrs. v. Montharapalla Padippua Attakoya and others, MANU/SC/0372/1994 : 1994 Supp (3) SCC 760
5. Kavita Trehan (Mrs.) and another v. Balsara Hygiene Products Ltd., MANU/SC/0094/1995 : 1994(5) SCC 380
6. Binayak Swain v. Ramesh Chandra Panigrahi and another, MANU/SC/0024/1965 : AIR 1966 SCC 948
7. Jai Berham and others v. Kedar Nath Marwari and others, MANU/PR/0085/1922 : AIR 1922 Privy Council 269
8. Chinnammal and others v. P. Arumugham and another, MANU/SC/0321/1990 : 1990(1) SCC 513
9. Vareed Jacob v. Sosamma Geevarghese and others,MANU/SC/0410/2004 : 2004(6) SCC 378"
44. I have heard learned counsel for the parties and gone through the record.
In order to decide and adjudicate the controversy involved in the present matter, following points of determination are framed:
(a) Whether as per the terms of agreement time is an essence of contract and if so what effect.
(b) Whether the plaintiff was willing to perform his part of contract.
(c) Whether the Court below has rightly decreed the suit for specific performance filed by the plaintiff.
(d) Whether the sale-deed dated 16.4.2001 executed by the Court below in favour of the plaintiff/respondent as per the decree dated 9.3.1978, when the present appeal has been dismissed in default, can be set aside at the instant of appellant No. 1/1.
45. Before deciding the controversy involved in the present case, it would be appropriate to have a glance to the relevant provisions of the Contract Act and Specific Relief Act which are necessary to resolve the controversy involved in the present case. Section 2(h) of the Contract Act provides that an agreement enforceable by law is an agreement and becomes void when it ceases to be enforceable. Section 10 enumerates the ingredients of a contract. It provides that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration 'and with a lawful object and are not hereby expressly declared to be void. It is also made clear that this will not affect any law in force and not expressly repealed by the Contract Act, by which any contract is required to be made in writing or in the presence of witnesses or any law relating to the registration of documents. Some of the contracts which have to be reduced to writing are the contracts mentioned in Section 25 of the Contract Act.
46. Evidently, before any contract will be enforced, it is essential that the terms of the contract must be clear, definite, certain and complete and the contract must be free from doubt, vagueness and ambiguity so as to leave nothing to conjecture or to be supplied by the Court. (See Nair Service Society v. R.M. Palai, MANU/KE/0080/1966 : AIR 1966 Ker 311).
47. Lord Hoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, MANU/UKHL/0054/1997 : (1998) 1 WLR 896, has summarised five principles of interpretation of contracts. These are as follows:
1. Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge.
2. The background means "matrix of fact".
3. The law excludes from the admissible background, the previous negotiations of the parties and their declarations of subjective intent.
4. The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.
5. The rule that words should be given their "natural and ordinary meaning reflects the common sense proposition that is not easily acceptable that people have made linguistic mistakes, particularly to formal documents."
48. In B.P. Refinery (Westernport) Pty. Ltd. v. Shire of Hastings, (1978) 52 PLJR 20 (PC), the Privy Council has laid down five conditions which are to be satisfied for an implied terms of contract. These are:
(1) It must be reasonable and equitable. (2) It must be necessary to give business efficacy to the contract. (3) It must be so obvious that "it goes without saying". (4) It must be capable of clear expression. (5) It must not contradict any express term of the contract. So Basically, every contract involves four elements viz.
1. Competency of the parties;
2. Consensus;
3. Consideration and object, and
4. Certainty
48-A. Thus, contracts may be classified according to (i) their subject-matter, (ii) their parties, (iii) their form (whether contained in deed or in writing, whether express or implied), (iv) their effect (whether bilateral or unilateral, whether valid, void or unenforceable).
49. Keeping in view the basic feature of the contract, the first important point to be considered for disposal of the controversy involved in the instant matter to look into the Section 31 of the Contract Act, defines a contingent contract as a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. The point to note is that the uncertain event on the happening of which the contract is conditional must be collateral to the contract and must not form part of the consideration. The condition may be a condition precedent or a condition subsequent.
50. Corpus Juris Secundum, Vol. 81 at p.p. 410-411 defines "Contingent Contract" as under:
"Where defendant's performance depends on the consent or approval of one not a party to the contract who is free to withhold his consent, specific performance of the contract will not be decreed where it does not appear that such consent or approval has been or can be obtained, or where it appears that such consent or approval is with-held or refused or has become impossible. The mere fact that a contract or transfer sought to be specifically enforced is subject to the approval of a public agency whose discretion is not subject to control by the Court, is not a bar to a decree compelling a party to execute the documents necessary for the consummation of the contract or transfer and to apply to the public agency fails or refuses to consent to the transfer, the Court will not grant specific performance of the contract."
51. In the case of C.L. Katial v. Mrs. Madden, MANU/PH/0042/1963 : AIR 1963 Punj 136, there was an agreement for sale which contained a clause to the effect that the vendor was to obtain the sanction of the Chief Commissioner for transfer of the site on which the building was constructed within two months. Such sanction was necessary on account of a condition in the ground lease. It was held that such a contract does not remain inchoate unless and until such sanction is obtained, when there is nothing to suggest that the application for sanction is likely to be rejected. So far as the parties to the agreement are concerned, the agreement is a complete agreement. The mere fact that sanction of the Chief Commission is to be obtained before the sale does not make the agreement incomplete and is not a bar to the grant of a decree for specific performance. If the Chief Commissioner does ultimately refuse sanction to the sale, the plaintiffs will not be able to enforce their decree but, as far as the Court is concerned, there is no reason for refusing the decree.
52. The said view has been approved by Hon'ble the Apex Court in the case of C.W. Vati Madden v. C.L. Katil, MANU/SC/0257/1963 : AIR 1964 SC 978.
53. In the case of Anjalidas v. Bidyut Sircar, MANU/WB/0004/1992 : AIR 1992 Cal 47, it has been held that a conditional decree for specific performance after obtaining the consent of any authority under any law is permissible.
54. In the case of Raheja Constructions v. Alliance, MANU/SC/0339/1995 : AIR 1995 SC 1768, Hon'ble the Apex Court held that a decree for specific performance was passed subject to the approval of the co-operative society for the sale of the flat in its building. Where it was contended that possession of the property could not be given to the plaintiff without permission from the Land Development Officer, it was held that such permission was not a condition precedent for grant of a decree for specific performance. If, alter the grant of a decree for specific performance, the Land Development Officer refuses to grant permission for the sale, the decree holder may not be in a position to enforce the decree, but for reason of that possibility, the decree cannot be refused.
55. Next point is to be considered in the present matter is the question of "Readiness and Willingness" to perform by the plaintiff/respondent on his part of the contract as per the settled position of the law the same has to be inferred from the conduct of the parties and attending circumstances. As held in the case of Raj Rani v. Kartar Singh, MANU/DE/0020/1975 : AIR 1975 Del 137, that there is a distinction between readiness to perform the contract and willingness to perform the contract. "Readiness" means the capacity of the plaintiff to perform the contract; this includes his financial ability to pay the purchase price. But "Willingness" postulates an enquiry into the conduct of the plaintiff.
56. In the Corpus Juris Secundum, vol. 81 pp. 950-951, the readiness and willingness has been interpreted that it is the general principle of law that a person seeking specific performance must show that he has performed or offered to perform or is ready, able and willing to perform, all the essential acts required by the contract and he must not remain quiet or hold himself aloof so as to enforce or abandon the contract as events may prove advantageous. The plaintiff is entitled to specific performance where he alleges and proves that he has complied substantially with the conditions of the contract or is able, ready and willing to perform the contract. (See also Satya Jain v. Anis Ahmed Rushdie, MANU/SC/1063/2012 : AIR 2013 SC 434).
57. In the case of Bijai Bahadur v. Shri Shiv Kumar, MANU/UP/0165/1985 : AIR 1985 All 223, this Court held that so far as the question of readiness and willingness is concerned while 'willingness' is merely a mental process, 'readiness' is something to do with translating that will into action and is preceded by a necessary preparation for being in a position to be ready. As to the averments about this continuous readiness and willingness the law never insists on any particular form and the necessary averment may be made in any language the plaintiff may choose to employ. The language is not important. The crucial thing is that the totality of the averments made in the plaint must indicate the readiness and willingness of the plaintiff, even though by necessary inference.
58. In the Case of Hira Devi v. Harinath, MANU/UP/0220/1989 : AIR 1989 All 11, this Court held that lack of averment as to continuous readiness and willingness in plaint in suit for specific performance of sale does not render the decree a nullity and in execution stage the lack of pleading aforesaid cannot be canvassed.
In the case of Ramakrishna Pillai v. Muhammed Kunju, MANU/SC/7174/2008 : AIR 2008 SC 1601, Hon'ble the Apex Court had reserved the finding of the High Court wherein it has been held that no plea as to readiness and willingness was raised and as such no specific performance was granted. It was held by the Hon'ble Supreme Court that the finding of the High Court was factually incorrect and as such the decree was set aside. The plaintiff was entitled to decree for specific performance.
59. Another accept is to be considered in the present case is that where time is the essence of the contract, failure to stick to the time disentitles the defaulter to seek specific performance. However, the question whether time is the essence of the contract has to be decided not only with reference to the terms of the contract but also with reference to the conduct of the parties and the facts and circumstances of the case. Thus, where time is the essence of the contract is an inference from proved facts and is therefore a question of law. (Sriram Cotton Pressing Factory v. Narayanasamy, MANU/TN/0270/1965 : AIR 1965 Mad 352). Where a contract relates to sale of an immovable property, it will normally be presumed that time is not the essence of the contract. As held by the Supreme Court in the case of Gomathinayagam Pillai v. Palanisamy Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868, where the fixation of period within which the contract has to be performed does not make a stipulation as to time as the essence of the contract.
60. Hon'ble the Apex Court in the case of Govind Prasad Chaturvedi v. Hari Dutt Shashtri, MANU/SC/0010/1977 : AIR 1977 SC 1005, held that the intention to treat time as the essence of the contract may be evidenced by the circumstances which should be essentially strong to displace the normal presumption that in a contract for sale of land stipulation as to time is not of essence of the contract.
61. Accordingly, it can be held that a suit for specific performance unless time is affirmatively stipulated in the contract as essential for performance, the failure of the plaintiff to perform on the very day fixed in the contract for performance does not necessarily defeat the suit for specific performance. The remedy may be available provided that a bona fide excuse exists for non-performance and that the delay does not make enforcement inequitable. Where parties make performance at the stipulated time essential, any default which is not waived or executed, will defeat the right to specific performance of the contract.
62. Further, the jurisdiction to grant decree (specific performance) is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so. All the same, the discretion must be exercised in a reasonable manner guided by sound judicial principles and not arbitrarily. If these principles are not observed, the judgment may be upset in appeal because. Section 20(1), Specific Relief Act provides that "the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal."
63. Thus the relief in specific performance is discretionary. (Mayawanti v. Kaushalya Devi, MANU/SC/0453/1990 : (1990) 3 SCC 1 and this discretion is, however, to be exercised in a judicial manner and cannot be arbitrary. [Nanak Builders v. Vinod Kumar Goel, AIR 1991 Del 315 at p. 319).
64. In addition to the said fact, for the specific performance, the basic principles are provided under Section 16(C) read with Expln. (ii) of the Specific Relief Act is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been unblemished throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief. Where there is a clear averment in the plaint that the plaintiff purchaser was always ready to get the sale-deed prepared after paying necessary consideration, order decreeing the suit for specific performance of contract in favour of the plaintiff is proper. (See Aniglase Yohannan v. Ramlatha, MANU/SC/0653/2005 : AIR 2005 SC 3563) and it will be a proper exercise of the discretion, where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance [Section 20(3)]. This discretion may be refused to be exercised for justifiable cause. (See Kayastha Pathshala v. Rajendra Prasad, MANU/SC/0267/1989 : AIR 1990 SC 415 and Nirmala Anand v. Advent Corporation Pvt. Ltd., MANU/SC/0455/2002 : AIR 2002 SC 2290).
65. In Maria Angelina (deceased) v. A.G. Balkis Bibee, MANU/SC/1255/2001 : AIR 2002 SC 2385, the Supreme Court held that in the absence of any plea by the defendant of hardship if the plaintiff was given a decree for specific performance, the plea cannot be entertained for the first time in the appeal and Their Lordships refused to interfere with the decree for specific performance.
66. Reverting to the facts/controversy involved in the present case, Sri Jaspreet Singh, learned counsel for appellant No. 1/1 has submitted that he does not want to press that the agreement dated 6.5.1974 is a contingent contract, however, the argument advanced by him is that as the plaintiff/respondent had not performed his part of obligation arising out of agreement and due to lapse on his part, the period of eight months has been lapsed. So, keeping in view said facts as well as the fact that the time is essence of the contract as per the terms of the agreement, the appellants have forfeited the earnest money given by the plaintiff/respondent at the time of entering into the agreement, the plaintiff/respondent is not entitled for any relief in the matter due to lapse on his part. Hence, the Court below wrongly decreed the suit for specific performance filed by the plaintiff.
67. He further submits that even otherwise there is no justification or reason on the part of the Court below to allow the suit for specific performance for sale of the property in premises in favour of the plaintiff/respondent as in view of the Clause/Item No. 5 of the agreement dated 6.5.1974 where it has been specifically provided that if in any circumstances, the permission has not been given/rejected then the plaintiff/respondent is entitled to take back the earnest money given by him and if the time entered into the agreement, the relief as claimed by the plaintiff/respondent in the plaint that the earnest money given by him along with Rs. 25,000/- may be refunded. So, judgment and decree is liable to be set aside.
68. In this regard, as per the clause/item Nos. 4 and 5 of the agreement dated 6.5.1974 entered between the parties in respect of the premises on behalf of the defendants/appellants, an application has been moved through counsel before the District Magistrate, Lakhimpur Kheri in order to obtain the permission for transferring of the premises as at that relevant point of time, it is mandatory condition for taking prior to permission in respect to the property situated in the urban area and parvi has been done by the plaintiff/respondent.
69. Thereafter, on 22.7.1974 from the office of the District Magistrate, Lakhimpur Kheri, a letter was written inter alia stating therein that certain formalities have to be completed in order to obtain permission for transferring of the permission within 15 days, otherwise, the same should not be granted. In view of the said development on behalf of the plaintiff/respondent, a telegram has been sent on 23.7.1974 which is on record as Ext. and the same was also received and acknowledged by the appellant/defendant No. 1. In response thereof, he sent a letter dated 24.7.1974 which is also an admitted document as Ext. No. 14. Keeping in view the above said facts as well as the documentary evidence on record, namely, Subhash Singh (P.W.-1) and Syed Mohd. Mukhtir Rizvi (D.W.-1), it is clearly borne out in the matter that after getting information to fulfil the requisite conditions as mentioned in the letter dated 22.7.1974, defendants/appellants failed to perform their obligations in the matter in question which is to be done as per letter dated 22.7.1974.
70. Further, from the evidence given by Shri Mohd. Mukhtar Husain (D.W.-1), it is also clear that he has admitted the fact that he has received a telegram from the plaintiff/respondent in regard to sending necessary documents within a week. In spite of the said admission/fact, defendant No. 1 was not able to state and prove by way of any cogent evidence why he has failed to perform his part of obligation arising out of the agreement. So, it is clearly establish in the present case on the basis of the material on record that the defendants/appellants have failed to take steps in the matter as per the terms of the agreement dated 6.5.1974 in order to obtain the permission from the office of the District Magistrate, Lakhimpur Kheri for transferring of the property in question and due to lapse on their part, the permission has been refused by the District Magistrate on 16.8.1974. So, the defendants/appellants are negligent as they have not performed their obligation arising out of agreement dated 6.5.1974 whereas from the material on record, it is clearly established and proved that respondent/plaintiff always willing to perform his part of the contract keeping in view the said facts as well as the provisions of Section 55 of the Contract Act, the question is to be considered that whether time is essence of the contract, the said section reads as under:
"55. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of essence of the contract.
If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.
71. From perusal of above section, the position which emerges out is that the above section deals with the effect of failure to perform the promise at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale-deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale-deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract.
72. The legal position on the point in issue is clear from the decision of a Constitution Bench of Hon'ble the Apex Court in the case of Chand Rani v. Kamal Rani, MANU/SC/0285/1993 : (1993) 1 SCC 519, held as under:
"It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language."
73. Hon'ble the Apex Court in the case of N. Srinivasa v. Kuttukaran Machine Tools Ltd., MANU/SC/0265/2009 : (2009) 5 SCC 182, held that in the contract relating to immovable property, time cannot be the essence of the contract", the appellant put forth the contention that in all contracts relating to sale of immovable property, time stipulated for performance, even if expressed to be the essence, has to be read as not being the essence of the contract and consequently the contract does not become voidable by the failure to perform before the specified time. A careful reading of the said decision would show that the sentence relied on (occurring in para 31) apparently was not the statement of legal position, but a conclusion on facts regarding the contract that was being considered by the Court in that case, with reference to its terms. In fact the legal position is differently stated in para 27 of the said decision:
"In a contract for sale of immovable property, normally it is presumed that time is not the essence of the contract. Even if there is an express stipulation to that effect, the said presumption can be rebutted. It is well settled that to find out whether time was the essence of the contract, it is better to refer to the terms and conditions of the contract itself."
74. Taking into consideration the earlier judgment on the point in issue, Hon'ble the Apex Court in the case of Saradamani Kandappan v. S. Rajalakshmi and others, MANU/SC/0717/2011 : (2011) SCC 18, in para 26 held as under:
"Relying upon the earlier decisions of this Court in Gomathinayagam Pillai v. Palaniswami Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868 and Govind Prasad Chaturvedi v. Hari Dutt Shastri, MANU/SC/0010/1977 : (1977) 2 SCC 539, held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. Thereafter, this Court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time: (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances as, for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land."
75. Thus, from the above said facts, that time is presumed not to be of essence of the contract relating to immovable property, but it is of essence in contracts of re-conveyance or renewal of lease. The onus to plead and prove that time was the essence of the contract was on the person alleging it, thus giving an opportunity to the other side to adduce rebuttal evidence that time was not of essence. That when the plaintiff pleads that time was not of essence and the defendant does not deny it by evidence, the Court is bound to accept the plea of the plaintiff. In cases where notice is given making time of the essence, it is duty of the Court to examine the real intention of the party giving such notice by looking at the facts and circumstances of each case. That a vendor has no right to make time of the essence, unless he is ready and willing to proceed to completion and secondly, when the vendor purports to make time of the essence, the purchaser must be guilty of such gross default as to entitle the vendor to rescind the contract.
76. Taking into consideration the said facts as well as judgment passed by the Court below and the position of the instant matter that after the agreement was entered between the parties on 6.5.1974, the plaintiff as per the terms of the agreement had applied for permission on 22.7.1974 for transfer of the immovable property situated in urban limits as per the law which is stood at that relevant point of time to the office of District Magistrate. Further, the office of the said authority required that the defendant should file an affidavit declaring the respective share of the co-sharer as well as declaration was needed as to whether the property situated in the urban limits and mukhtyaar was also required to file but in spite of the written request and personal efforts made by plaintiff, Sri Sukhbir Singh, defendant No. 1/Sri Syed Mohd. Murthir Rizvi had not performed his part/obligation arising out of the agreement in question. In the matter, the written notice/request has been set out by the plaintiff but in spite of the assurance given by the defendant No. 1 he did not keep his promises. As a result of which the required permission was not obtained. In this regard, the Court below has given following findings:--
"One of the terms of the contract was that the vendor shall obtain necessary permission of the Government for the sale within two months of the agreement and if the permission was not forthcoming within that time, it was open to the vendees to extend the date or to treat the agreement as cancelled. The vendor made an application for permission but for the reason known to her own, withdraw the same. In the suit filed by the vendees for specific performance of the contract or in the alternative for damages it was found that the vendees were always ready and willing to perform their part of the contract, that it was the vendor who willfully refused to perform her part of the contract and that the time was not of the essence of the contract. It was held that the contract was not a contingent contract that the parties had agreed to bind themselves by the terms of the agreement executed between them. The Court had got to enforce the terms of the contract to enjoin upto the vendor to make the necessary application for permission in the event of the permission being refused the vendees shall be entitled to the damages.
In the said very authority reliance was placed on Moti Lal v. Nanhe Lal, MANU/PR/0061/1930 : AIR 1930 PC 287. In that authority their Lordships of the judicial committee of the privy council came to the conclusion that here was a completed contract and that the condition in the agreement that the vendor would obtain the sanction of the Chief Commissioner to the transaction of sale did not render the contract incomplete."
77. Further while holding that the time is not essence of the contract, the Court below has also given a finding that I have already observed that once it is held that there is a completed contract, and no special limitation is fixed by the parties, to the agreement general limitation would govern the fate of the suit, merely stipulation of eight months in obtaining the permission was not an important feature of the case. Particularly, when the suit was filed that condition automatically sublimed and has become infructuous and also held that I am in agreement with the proposition and the circumstances forced to believe that it was defendant No. 1 in his own capacity and as general agent for all other dependents, who has avoided to cooperate and to perform his part of the contract. Accordingly, the circumstances of the case force me to draw an adverse inference against the case set up by the defendant. He raised contradictory pleas in his written statement and failed to prove them by any evidence, and law permits to draw an adverse inference against him. The reasons for such a conduct are obvious, because the house which is subject-matter under the agreement is under the tenancy of city Post Office. It is regulated by the allotment under the Rent control Act and its rent is also not much. The prices of the property situated in urban limits are rising day by day. It has been due to this reason that defendant intended to derive and undue advantage. He intends to avoid the contract entered into between the parties and might have talked with some other person to sell it at a high price.
78. Thus, keeping in view the above said facts and the position of law as exists on the point in issue in the instant matter, as per the terms of the agreement dated 6.5.1974, subject-matter of which is the transfer of premises, the time is not essence of the contract.
79. Next point is to be considered in the matter whether plaintiff/respondent is ready and willing to perform his part of obligation arising out of the agreement dated 6.5.1974, as per the facts stated herein above and the paragraph No. 20 of the plaint which is quoted herein below:
80. As well as the Court below has also given a finding in the judgment under challenge in the present appeal, the relevant portion quoted herein below:
"It was quite natural because there was no certainty as to whether the permission would be granted or not and so far these reasons the payment of earnest money worth Rs. 7000/- was secured and the obligation of the parties and their rights were regulated accordingly. Thus, in my opinion Ext. 1 was a competed contract and obtaining of permission was just a matter of procedure which was to be observed under law at that time. When the suit was filed even that formality came to an end and the defendants are bound to honour of agreement and to act upon it.
Now looking into the evidence on the points covered by the issues, it can not be said that plaintiff was totally negligent in performing his duties under the agreement, particularly to condition No. 4. As P.W.-1 he has stated, that he had moved an application, did the needful, continuously remained informing defendant No. 1 about the progress and it was defendant No. 1 who willfully neglected to cooperate and it was due to this reasons that the application for permission was "filed". In this regard, Ext. 2 to 4 are worth perusal which relate to the Office of District Magistrate Kheri. The copies of several letters and notices on record would go to show that plaintiff was actively prosecuting the case."
81. In the present case, the plaintiff/respondent was always willing to perform his part of obligation arising out of the contract act in order to get the suit for specific performance of the decree which means that person claiming performance has kept the contract subsisting with preparedness to fulfil his obligations and accept performance when the time for performance arrives the finding given by the Court below on the point in issue is in accordance with law. Because, as far back as 1928, the Privy Council in the case of Ardeshir H. Mama v. Flora Sassoon, MANU/PR/0024/1928 : AIR 1928 PC 208 at p. 216 held that plaintiff must establish that he was since the date of the contract continuously ready and willing to perform his part of the contract. If he fails to do so, his claim for specific performance must fail............The plaintiff must plead and prove that he was ready and willing to perform his part of the contract continuously between the date of the contract and the date of hearing of the suit.
82. In the case of Pandu Rang Ganpat Thanavade v. Ganpath Bairukadam, 1998(2) JCLR 209 (SC), Hon'ble Supreme Court held that the burden lies on the plaintiff to prove his continuous readiness from the date of the contract till the date of hearing of the suit of perform his part of the contract. The plaintiff must in such a suit aver in the plaint and prove in evidence that he was continuously ready and willing to perform his part of the contract right from the date of agreement till the date of decree or hearing of the suit; but he is not required to do so that on each and every date of hearing he had money ready with him. Even if there is no evidence on the side of the defendant, the plaintiff cannot take advantage of it as he has not himself stated in his evidence that he was ready and willing to perform his part of the contract and he is not entitled to decree of specific performance. Where in such a suit the plaintiff has proved his readiness and willingness to perform his part of the contract and also obtained possession of the property at the time of the agreement, requirement of Section 16(c) of the Act is well complied with.
83. Accordingly, I do not find any illegality or infirmity in the finding given by the Court below that in the present case, plaintiff'/respondent was always willing to perform his part of obligation, rather the same is perfectly valid. So, the action on the part of the Court below thereby passing the decree dated 9.3.1978 for specific performance is a valid exercise.
84. So far as the argument advanced by Shri Jaspreet Singh, learned counsel for the appellant No. 1/1 that the sale-deed dated 16.4.2001 which has been executed by the Court below then the appeal was dismissed for want of prosecution by order dated 14.11.2000. The same can be challenged by this Court by applying the principles of Doctrine of lis pendens as well as Order 41 Rule 33 C.P.C. and the defendants/appellants can be put into possession as per Section 144 C.P.C. and doctrine of lis pendens /Section 52 of the Transfer of Property Act.
85. In order to dealt with the said argument, the facts which is to be taken for consideration are that the present appeal has been dismissed for want of prosecution on 14.11.2000. Thereafter the plaintiff/respondent moved an application before the Court below for implementation of the decree dated 9.3.1978 with the prayer that to execute the sale-deed in his favour. On the said application, notices were issued by the Court below to the defendants/appellants but did not file their any objections. The sale-deed dated 16.4.2001 has been executed by the Court in favour of the plaintiff/respondent (Subhash Singh).
86. Thus, keeping in view the said facts as well as the order dated 23.7.2003 and 22.2.2012 passed by this Court which have not been assailed by defendants/appellants or appellant No. 1/1 before any higher forum, the question is to be considered whether on behalf of the appellant No. 1/1, the sale-deed dated 16.4.2001 can be set aside/cancelled/annulled keeping in view his share in the premises in question. The first point is to be considered is Doctrine of lis pendens is expressed in the maxim "ut lite pendente nihil innovetur". It imposes a prohibition on transfer or otherwise dealing of any property, during the pendency of a suit, provided the conditions laid down in Section 52 of the Act are satisfied.
87. The principle of lis pendens, it is said, owe its origin to the maxim of Roman Law "Rem de qua controversia prohib mur in acrum dedicate", which means, where the subject in dispute owing to contest passes into the custody of the judiciary, parties to it are under an obligation not to withdraw it from the protection of the Judge.
Tracing back the genesis of doctrine, it relate back to a decision of 1857 in Bellamy v. Sabine, (1857) 1 De G & J 566, wherein Lord Justice Turner said:
"It is, as I thing, a doctrine common to the Courts both of Law and Equity, and rests, as I apprehend, upon this foundation that it would plainly be impossible that any action or suit could be brought to a successful termination, if alienations pendente lite were permitted to prevail. The plaintiff would be liable in every case to be defeated by the defendant's alienating before the judgment or decree, and would be driven to commence his proceedings de novo, subject again to be defeated by the same course of proceeding."
88. The definition of lis pendens Corpus Juris Secundum, Vol. LIV, page 570, reads as under:
"Lis pendens literally means a pending suit; and the doctrine of lis pendens has been defined as the jurisdiction, power, or control which a Court acquires over property involved in suit, pending the continuance of the action, and until final judgment therein."
89. Section 52 of the Act has been construed by a three Judge Bench of Apex Court in Dev Raj Dogra and others v. Gyan Chand Jain and others, MANU/SC/0500/1981 : AIR 1981 SC 981 and it says that for application of said Section following conditions have to be satisfied:
"1. A suit or a proceeding in which any right to immovable property must be directly and specifically in question, must be pending;
2. The suit or the proceeding shall not be a collusive one;
3. Such property during the pendency of such a suit or proceeding can not be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto under any decree or order which may be passed therein except under the authority of Court. In other words, any transfer of such property or any dealing with such property during the pendency of the suit is prohibited except under the authority of Court, if such transfer or otherwise dealing with the property by any party to the suit or proceeding affects the right of any other party to the suit or proceeding under any order or decree which may be passed in the said suit or proceeding."
90. Apex Court in the case of Singh v. Dhanwanti, MANU/SC/0046/2012 : 2012(2) SCC 628, has favoured to apply principle of lis pendens irrespective of the fact, whether there was any stay order passed by Court or not. The Court said:
"If such a view is not taken, it would plainly be impossible that any action or suit could be brought to a successful termination if alienations pendente lite were permitted to prevail. The explanation to this section lays down that the pendency of a suit or a proceeding shall be deemed to continue until the suit or a proceeding is disposed of by final decree or order, and complete satisfaction or discharge of such decree or order has been obtained or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force. In the present case, it would be canvassed on behalf of the respondent and the applicant that the sale has taken place in favour of the applicant at a time when there was no stay operating against such sale, and in fact when the second appeal had not been filed. We would however, prefer to follow the dicta in Krishanaji Pandharinath (supra) to cover the present situation under the principle of lis-pendens since the sale was executed at a time when the second appeal had not been filed but which came to be filed afterwards within the period of limitation. The doctrine of lis-pendens is founded in public policy and equity, and if it has to be read meaningfully such a sale as in the present case until the period of limitation for second appeal is over will have to be held as covered under Section 52 of the T.P. Act."
91. In other words the aforesaid doctrine is based on the principle that the parties to a suit cannot allowed to shorten the arms of Court in dealing with suit by giving effect to the transfers of disputed property to third party. In other words the doctrine is one of convenience.
92. Hon'ble the Apex Court in the case of Deo Chand v. Shiv Ram, MANU/SC/0359/1964 : AIR 1965 SC 615, that Order XLV, Rule 5 held that the inherent powers of this Court, to make necessary orders to meet the ends of justice or to prevent abuse of the process of the Court, are not affected by the rules. The existence of such an inherent power would be a matter of grave doubt when the Code 115 sufficiently deals with the right of the decree-holder to execute the decree and the powers of the High Court to give directions in connection with such execution. No occasion for the exercise of any inherent power can arise when the High Court itself does not give any such directions and had not been asked by the judgment-debtor appellant to stay the execution of the decree. To exercise any such inherent power would be not for the prevention of the abuse of the process of the Court but may be to encourage it inasmuch as the judgment-debtor who had been in default in taking necessary action at the proper time would be encouraged to ask for that action after the execution of the decree and during the pendency of the appeal in this Court. Law contemplates transfers by a party pending litigation, does not prohibit them but makes them subject to the result of the litigation.
93. Further argument advanced by Shri Jaspreet Singh, learned counsel for the appellant No. 1/1 is that in view of the Order 41 Rule 33 C.P.C. for cancel/set aside the sale-deed dated 16.4.2001 as per the said provision, the general principle is that a decree is binding on the parties to it until it is set aside in appropriate proceedings. Ordinarily, the appellate Court must not vary or reverse a decree/order in favour of a party who has not preferred any appeal and this rule holds good notwithstanding Order 41, Rule 33, C.P.C. However, in exceptional cases the rule enables the appellate Court to pass such decree or order as ought to have been passed even if such decree would be in favour of parties who have not filed any appeal. The power, though discretionary, should not be declined to be exercised merely on the ground that the party has not filed any appeal.
94. As per the provisions of Section 144 C.P.C., the Court has power to put back the appellant No. 1/1 to possession of the premises, even if, the sale-deed executed in case the appeal is allowed. As per the said section, the basic principle underlying the restitution is "actus curaie neminem gravabit" which means that the act of the Court should not result in harm to a litigant. The essential postulate of Section 144, is status quo and restoration of anterior position of which the party is deprived of due to the wrong order or approach. The invocation of Section 144 arises which the party deprived of his right seeks relief as a sequel to an order reversing or varying the earlier order. Section 144 enables the party to relegate to the original position, blotting out the changed situation pursuant to the wrong order. The party wronged is retrieved and restored to the position prevailing at the earlier stage prior to the passing of the initial order.
95. This Court in the case of Kedar Nath v. Sheo Muret, 1971 All LJ 34, held that the whole object of Section 144 is to restore status quo ante. If a person was wrongfully deprived of a property on account of a decision of a Court which was later reversed, he is entitled to claim restoration of the possession of that very property and also the payment of such compensation, mesne profits, etc., as are payable consequent on such variation or reversal of the decree. In other words, the applicant for mesne profits must be entitled to the benefit of that very property and that property should continue to exist. This presupposes that the applicant has a subsisting right in that very property. In case, however, the property itself has ceased to exist, as for example by statutory vesting relief of restitution is not available.
96. Hon'ble the Apex Court in the case of Binayak Swain v. Ramesh Chandra Panigrahi, MANU/SC/0024/1965 : AIR 1966 SC 948, held that the principle of the doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. This obligation arises automatically on the reversal or modification of the decree and necessarily carries with it the right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties, so far as they can be restored, to the same position they were in at the time when the Court by its erroneous action had displaced them from.
97. Hon'ble the Apex Court in the case of Union Carbide Corpn. v. Union of India, MANU/SC/0058/1992 : AIR 1992 SC 248, held that restitution is an equitable principle and is subject to the discretion of the Court. Section 144, embodying the doctrine of restitution does not confer any new substantive right to the party not already obtaining under the general law; it merely regulates the power of the Court in that behalf. There is always an inherent jurisdiction to order restitution a fortiori where a party has acted on the faith of an order of the Court.
98. Moreover in the instant matter, the provisions of Order 41, Rule 5 C.P.C. is also to be considered which is an enabling provision whereby the Court for sufficient cause can stay the execution of the decree or order under appeal but if it does not stay the execution of the decree or order under appeal then mere filing of an appeal does not operate as a stay of the proceedings and from the perusal of the Order 41, Rule 5 of C.P.C. it is abundantly clear that, the intention of the Legislature is that it is either appellate Court or the executing Court which can stay the execution proceedings and no other Court. And it is not in dispute between the parties in the instant matter that when the sale-deed was executed in favour of the plaintiff/respondent after giving opportunity to the defendants/appellants by the Court below, there was no stay order thereby restraining for execution of the decree dated 9.3.1978. So, the action on the part of the Court below thereby executing the sale-deed is as per the provisions Order 41, Rule 5 C.P.C. (See P.R. Deshpande v. Maruti Balaram Haibatti, MANU/SC/0491/1998 : AIR 1998 SC 2979).
99. In view of the above said facts, the argument advanced by learned counsel for the appellant No. 1/1 that the action on the part of the Court below thereby executing the sale-deed and the same cannot effect the right of the appellant No. 1/1 to challenge the decree of specific performance, has got no force and the appellant No. 1/1 cannot derive any benefit from the judgment cited on his behalf as they are not applicable in the facts of the case.
100. For the foregoing reasons, I do not find any illegality or infirmity in the judgment and decree dated 9.3.1978 passed by the Court below decreeing the suit for specific performance of the plaintiffs/respondents.
101. In the result, the appeal lacks merit and is accordingly dismissed. No order as to costs.
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