Friday, 17 April 2020

How to appreciate evidence if judgment debtor is claiming rescission of contract as per S 28 of Specific relief Act?

The Hon'ble Supreme Court in the case reported in MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 (supra) following it's earlier decision in the case of HUNGERFORD INVESTMENT TRUST LTD. Vs. HARIDAS MUNDHRA reported in MANU/SC/0684/1972 : (1972) 3 SUPREME COURT CASES 684 at paragraph 27 has held as under:-

"27. In the case of Hungerford Investment Trust Ltd. v. Haridas Mundhra it has been held that when the court passes the decree for specific performance, the contract between the parties is not extinguished. That the decree for specific performance is in the nature of preliminary decree and the suit is deemed to be pending even after the decree. Hence, the court retains control over the entire matter even after the decree. Since the court retains control over the matter, despite the decree, it is open to the court to order rescission of the agreement, when it is found that the decree-holder is not ready and willing to abide by his obligations under the decree."

23. A large area in a suit for Specific Performance of contract since has been left to the discretion of the Court, the conduct of the parties to the suit assumes utmost significance in exercise of such discretion. The decree holder put the decree into execution and proceeded with the said execution case, took all steps required to be taken by him for the satisfaction of the said decree even before the said decree had attained finality. Whereas the judgment debtor in spite of receipt of the notice did not appear in the said execution case and allowed the decree holder to take those steps to get the decree matured. The conduct of the decree holder, therefore, favours him for exercise of the said discretion to protect the decree.


IN THE HIGH COURT OF CALCUTTA

CO 4271 of 2016 and CO 454 of 2017

Decided On: 01.10.2019

 Sabyasachi Ghosh  Vs. Pushparani Das

Hon'ble Judges/Coram:
Biswajit Basu, J.

Citation: AIR 2020 Cal 17


1. The decree holder in a suit for specific performance is the petitioner of the present revisional applications under Article 227 of the Constitution of India. The petitioner filed the suit being Title Suit No. 134 of 2002 for specific performance of an agreement for sale dated December 20, 1999. The First Court of learned Civil Judge (Senior Division) at Barasat, Dist. 24 Parganas (North) by the ex-parte judgment and decree dated February 19, 2008 allowed the said suit by directing the defendant/opposite party to execute the sale deed in favour of the plaintiff/petitioner in respect of the suit property within two months from the date of the decree on receipt of the balance consideration money.

2. The judgment-debtor/opposite party on August 27, 2015 filed an application under Section 28 of the Specific Relief Act, 1963 for rescission of the aforesaid agreement for sale on the ground that the petitioner has failed to comply with the condition of the decree by not paying the balance consideration price within period of two months stipulated under the said decree.

3. The learned Trial Judge by the Order No. 64 dated August 30, 2016 allowed the said application thereby rescinded the said agreement for sale subject to the condition that the opposite party shall refund the earnest money of Rs. 60,000/- to the petitioner with fifteen per cent per annum interest thereon from the date of receipt of the said amount till the date of payment, within three months from the date of the said order and in default the order of rescission of the said agreement for sale has been directed to be vacated and the decree of specific performance has been directed to be restored. The said order is under challenge in C.O. No. 4271 of 2016. Consequent to the rescission of the said agreement for sale the learned Trial Judge by the Order No. 30 dated August 30, 2016 dismissed the application for restoration of the execution case filed by the petitioner holding that the same has become infructuous. The said order is under challenge in CO. 454 of 2017.

4. Mr. Karmakar, learned counsel for the petitioner submits that the decree did not specify the period within which the balance consideration money was required to be paid by the decree holder as such the learned Trial Judge has committed an error in holding that impliedly the said balance consideration price had to be tendered before the expiry of the period of two months, specified in the decree for execution of the deed of conveyance. He placed reliance on the decision of the Hon'ble Supreme Court in the case of KUMAR DHIRENDRA MULLICK AND OTHERS Vs. TIVOLI PARK APARTMENTS (P) LTD. reported in MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 to give support to his such contention.

5. Mr. Karmakar further submits that the suit was decreed on February 19, 2008 within five months thereafter the decree holder had put the decree into execution and proceed with the said execution case till finalisation of the draft deed of conveyance upon deposit of the balance consideration money as such the facts and circumstances of the present case are more akin to the decision of the Hon'ble Supreme Court reported in MANU/SC/7245/2007 : 2009 (5) SUPREME COURT CASES 262 (supra) than the case of CHANDA (DEAD) THROUGH LRS. Vs. RATTNI AND ANOTHER reported in MANU/SC/7245/2007 : (2007) 14 SUPREME COURT CASES 26 : AIR 2007 SUPREME COURT 1514. Therefore, according to him the learned Trial Judge is not correct in distinguishing the decision of the Hon'ble Supreme Court reported in MANU/SC/7245/2007 : 2009 (5) SUPREME COURT CASES 262 (supra) on facts and in relying on the decision of the Hon'ble Supreme Court reported in MANU/SC/7245/2007 : (2007) 14 SUPREME COURT CASES 26 (supra) to hold that the payment of balance consideration money is inbuilt in the direction contained in the decree for execution of the deed of conveyance by the judgment debtor in favour of the decree holder and the failure of the decree holder to comply with the said condition within the said period reflects his negligence and unwillingness to pay be balance consideration money.

6. Mr. Karmakar, taking support of the decision of the Hon'ble Supreme Court reported in MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 (supra) submits that the learned Trial Judge took into his consideration of the escalation of the price of the suit property for rescission of the agreement but the said consideration is completely irrelevant to decide an application under Section 28 of the Specific Relief Act, 1963 for rescission of an agreement.

7. Mr. Karmakar, placing reliance on the Division Bench decision of this Court in the case of MADAN THEATRES LIMITED Vs. RUPALI CINEMA & CO. & ORS. reported in MANU/WB/0522/2000 : 2001 (1) ICC 188 (CALCUTTA) contends that the jurisdiction of Section 28 of the Specific Relief Act, 1963 to rescind an agreement for non-compliance of the condition of the decree can only be invoked when the decree attains finality on the acceptance of it by the parties. He submits that in the present case the judgment debtor did not accept the said decree as she put the decree under challenge by filing Misc. Case No. 205 of 2008 on July 04, 2008 under Order IX Rule 13 of the Code of Civil Procedure as such the decree did not attain finality till the said Misc. case was dismissed consequent upon the dismissal of the application for condonation of delay in filing the said Misc. case on July 04, 2015 but the decree holder long prior to the said date, deposited the balance consideration price with the Executing Court on September 19, 2013 which was accepted by the Executing Court and the decree holder was allowed to take further steps towards the satisfaction of the decree. He therefore, submits that under such factual background the learned Trial Judge is not justified in invoking his jurisdiction to rescind the agreement.

8. Mr. Karmakar, thereafter submits that the application for rescission of the agreement is barred by limitation. He submits that if it is assumed that the decree holder is required to pay the balance consideration price within the two months fixed by the decree for execution of the sale deed then right to apply for rescission of the agreement for non-compliance of the said condition within the said period accrues in favour of the judgment debtor on the expiry of the said two months and the judgment debtor under such circumstances is obliged to file the said application within three years after expiry of the said two months as the limitation for filing the said application is governed by Article 137 of the Limitation Act, 1963 but in the said application since was filed long after expiry of the said period, it is liable to be dismissed on the said ground being barred by limitation. He in support of his said submission refers to the Single Bench decision of Andhra Pradesh High Court in the case of KANTAMANENI VENKATESWARA RAO AND ORS. VS. MEKA VENKATESWARA RAO AND ORS. reported in MANU/AP/0386/1993 : (1993) 2 ALT 480.

9. Mr. Bardhan, learned counsel for the judgment debtor/opposite party refuting the contentions of Mr. Karmakar, submits that the tender of balance consideration money within the said two months is inbuilt in the direction of the decree as the said payment is the condition precedent for execution of the sale deed in favour of the judgment debtor, therefore, it has rightly been held by the learned Trial Judge that the decree holder by not tendering the said money to the judgment debtor within the said stipulated time had failed to comply with the condition of the decree and has rightly rescinded the contract following the ratio of law enunciated in the decision of the Hon'ble Supreme Court reported in MANU/SC/7245/2007 : (2007) 14 SUPREME COURT CASES 26 (supra).

10. He submits that the application under Order IX Rule 13 of the Code since was filed out of time it was accompanied by an application for condonation of delay according to him pending disposal of the said application for condonation of delay, the said proceeding did not see the light of the day causing a hindrance to the attainment of finality of the said decree thereby releasing the decree holder discharging him from his liability to pay the balance consideration price within the time fixed by the decree.

11. Mr. Bardhan, further contends that the decree holder cannot extend the time to deposit the balance consideration price fixed by the decree by his own action unless sanctified by the Court. He submits filing of an application for extension of time to deposit the balance consideration price is must, non-filing of such an application is fatal. In support of his such contention he relies on the decision of the Hon'ble Supreme Court in the case of V.S. PALANICHAMY CHETTIAR FIRM Vs. C. ALAGAPPAN AND ANOTHER reported in MANU/SC/0049/1999 : (1999) 4 SUPREME COURT CASES 702 and the decision of the Division Bench decision of this Court in the case of PANKOJ KUMAR BHATTACHARJEE Vs. MANMATHA NATH VIDYABHUSHAN BHATTACHARJEE reported in MANU/WB/0101/1973 : AIR 1973 CALCUTTA 439.

12. Mr. Bardhan, next contends that the argument of Mr. Karmakar that the application for rescission for agreement of sale is barred by limitation is misconceived inasmuch as the petitioner has waived his right to object the maintainability of the said application on the ground of limitation by not taking the said plea in the Court below. Mr. Bardhan, to give support to his said contention places reliance on the Division Bench decision of this Court in the case of KASHINATH MONDAL & OTHERS. Vs. STATE OF WEST BENGAL & OTHERS. reported in MANU/WB/0564/2007 : (2008) 2 CHN 7.

13. Mr. Bardhan, concludes his submission questioning the maintainability of the revisional application on the ground that by the order impugned the rights of the parties since have been finally determined it pertains the character of a decree, therefore, is not amenable to revision.

14. Mr. Karmakar, in reply to the submissions of Mr. Bardhan submits that there is no contemplation under Section 28 of the Specific Relief Act, 1963 that an application is required to be filed for extension of time to comply with the condition of the decree, rather the said power is inherently vested with the Court. He in support of his such contention cites the Single Bench decision of the Karnataka High Court in the case of MALLANNA @ APPAIAH Vs. SMT. MUNINANJAMMA @ NANJAMMA reported in MANU/KA/0314/2001 : AIR 2001 KARNATAKA 205.

Heard learned counsel for the parties. Perused the materials on record.

15. The power of the Trial Court to retain it's jurisdiction over the suit even after the grant of the decree for specific performance is well recognized. It is equally settled that such power is required to be exercised primarily to protect the decree but in a situation where decree holder is not ready and willing to abide by his obligation under the decree the Trial Court has the jurisdiction to rescind the contract.

16. To appreciate the scope and ambit of the Section 28 of the Specific Relief Act, 1963 it is profitable to quote the following paragraph of the Division Bench decision of this Court in the case of TAPAN KUMAR CHATTERJEE Vs. KALYANI DEBI reported in MANU/WB/0062/1985 : 89 CWN 27.

"12. The law had since then been materially changed by the new Specific Relief Act, 1963. Now a separate suit for rescission of the contract based on such a default being barred under Section 28(4), Section 28(1) provides for rescission in the same suit along with consequential reliefs under Section 28(2). It is significant to note that what the judicial decisions earlier recognised, namely, power of the court to condone the breach and extend the time fixed by the initial decree for payment of the balance consideration has now been incorporated expressly in Section 28(1) of the new Act. Hence, there can no longer be any doubt about the existence of power in the court to extend the time for payment as fixed by the initial decree. Recognising the initial decree to be a preliminary decree, the legislature expressly provided that the time specified therein can never be so peremptory that it can admit of no alteration under any circumstances."

(Emphasis supplied by me)

17. Let me now consider how far the learned Trial Judge is justified to rescind the agreement for sale in exercise of such jurisdiction vested on him under the aforesaid provision of the said Act. The suit was decreed ex-parte in the following form:-

"That the suit be and the same is decreed ex parte with cost against the defendant in preliminary form.

The defendant is directed to execute and register of appropriate sale deed in favour of the plaintiff in respect of the suit property within two months from this day on receipt of balance consideration money in terms of the agreement, failing which the plaintiff would be at liberty to file appropriate application for decreeing the suit in final form.

18. The provision of Section 28 of the Specific Relief Act, 1963 to rescind the contract for the breach of the condition of the decree can only be invoked where the decree has been accepted by the parties as has been held by the Division Bench of this Court in the case reported in MANU/WB/0522/2000 : (2001) 1 ICC 188 (CALCUTTA) (supra). In the present case the decree was not accepted by the judgment debtor as she put the decree under challenge resorting to the provision of Order IX Rule 13 of the Code for setting aside the said decree. Merely because the said challenge was subject to the condonation of delay in approaching the Trial Court cannot dilute it's effect. Therefore, the argument of Mr. Bardhan, that till the delay was condoned the pendency of the application for setting aside the ex-parte decree is not a hindrance to the attainment of the finality of the decree has no merit, therefore, is rejected.

19. The decree attains finality only on July 04, 2015 when the application for condonation of delay in filing the application for setting aside the ex-parte decree was dismissed. In the present case since the decree holder had deposited the balance consideration price with the Executing Court much prior to the said date, investigation to the questions whether the payment of the balance consideration money to the judgment debtor within two months is inbuilt in the direction of the decree for execution of the sale deed or not and which of the two judgments of the Hon'ble Supreme Court i.e. MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 (supra) and MANU/SC/7245/2007 : (2007) 14 SUPREME COURT CASES 26 (supra) are more applicable in the facts and circumstances of the present case are completely irrelevant investigations to decide the issue involved in the present matter.

20. The Hon'ble Supreme Court in the case reported in MANU/SC/0934/2004 : 2005 (9) SUPREME COURT CASES 262 (supra) following it's earlier decision in the case of HUNGERFORD INVESTMENT TRUST LTD. Vs. HARIDAS MUNDHRA reported in MANU/SC/0684/1972 : (1972) 3 SUPREME COURT CASES 684 at paragraph 27 has held as under:-

"27. In the case of Hungerford Investment Trust Ltd. v. Haridas Mundhra it has been held that when the court passes the decree for specific performance, the contract between the parties is not extinguished. That the decree for specific performance is in the nature of preliminary decree and the suit is deemed to be pending even after the decree. Hence, the court retains control over the entire matter even after the decree. Since the court retains control over the matter, despite the decree, it is open to the court to order rescission of the agreement, when it is found that the decree-holder is not ready and willing to abide by his obligations under the decree."
21. The facts and circumstances of the present case are therefore required to be looked into to ascertain how far the decree holder was ready and willing to abide by his obligations under the decree. The admitted facts of the present case is that the suit was decreed in the aforesaid form on February 19, 2008 and the judgment debtor applied for setting aside the said decree on July 04, 2008 with a prayer for condonation of delay. Pending disposal of the said application for setting aside the said decree, the decree holder put the decree into execution and proceeded with the same, deposited the balance consideration money in the Executing Court on June 06, 2013, deposited the requisite stamp for registration of the deed of conveyance in the Executing Court on September 19, 2013 and the Executing Court prepared signed and sealed the deed of conveyance on September 20, 2013 and authorised an officer of the said Court to execute and register the said sale deed. The decree holder manifested his intention to protect the decree by taking the aforesaid steps, the learned Trial Judge therefore erred in holding that the decree holder was negligent and was not ready and willing to pay the balance consideration price in time.

22. The agreement for sale was entered into by and between the parties in the year 1999. The suit for specific performance of the said agreement was filed in the year 2002. The suit was decreed in the year 2008. The decree holder put the decree into execution before the said decree had attained finality. Therefore, in the facts of the present case escalation of the price of the property under the said agreement is no ground for rescission of the said agreement under Section 28 of the Specific Relief Act, 1963. It is relevant in this context to quote paragraph 18 of the decision of the Hon'ble Supreme Court in the case reported in MANU/SC/0934/2004 : (2005) 9 SUPREME COURT CASES 262 (supra):-

"18. We do not find any merit in the aforesaid arguments. As far back as 20-08-1970, the trustees allowed the lessee, Mohd. Ismail, to assign the leasehold rights in favour of the respondent herein. Further, the assignee was allowed to be put in possession. On 16-08-1980, the trustees entered into oral agreement to renew the above lease for 70 years w.e.f. 1-5-1981 at increased rent of Rs. 30,000/- per month plus premium of Rs. 30 lakhs as found by the trial court in Title Suit No. 176 of 1981 decided on 25-7-1985. In the circumstances, increase in the value of the immovable property, on account of inflation, is no ground to rescind the agreement dated 16-8-1980. We have to see the circumstances prevalent as on 16-8-1980 when the parties entered into the oral agreement to lease."
23. A large area in a suit for Specific Performance of contract since has been left to the discretion of the Court, the conduct of the parties to the suit assumes utmost significance in exercise of such discretion. The decree holder put the decree into execution and proceeded with the said execution case, took all steps required to be taken by him for the satisfaction of the said decree even before the said decree had attained finality. Whereas the judgment debtor in spite of receipt of the notice did not appear in the said execution case and allowed the decree holder to take those steps to get the decree matured. The conduct of the decree holder, therefore, favours him for exercise of the said discretion to protect the decree.

24. The next question crops up for consideration is whether the decree holder under the facts and circumstances of the present case was required to obtain prior permission from the Executing Court to deposit of the balance consideration price by filing an application or not. Neither the decision of the Hon'ble Supreme Court reported in MANU/SC/0049/1999 : (1999) 4 SUPREME COURT CASES 702 (supra) nor the decision of the Division Bench of this Court reported in MANU/WB/0101/1973 : AIR 1973 CALCUTTA 439 (supra) relied on by Mr. Bardhan, are the pointer for the proposition of law that filing of a formal application for extension of time under Section 28 of the Specific Relief Act, 1963 is mandatory. On the contrary the decision learned Single Judge of the Kerala High Court relied on by Mr. Karmakar, is apposite to the context and the paragraph 6 of the said decision, quoted below answers the issue:-

"6. What remains to be considered is whether a written application is necessary for extension of time. Here is a case where, even in the decree the Court below allowed the decree-holder time to make the deposit. Mere failure on the part of the decree-holder to deposit the amount does not render the decree ineffective or release the judgment-debtor form the decree ineffective or release the judgment-debtor from his liability to satisfy the decree. It is only when there is willful default on the part of the decree-holder to make deposit, that the Court would be justified in refusing extension of time. There is no such willful default evident in the present case and as such the Court below has the authority and power, under Section 148 of the C.P.C. to extend the time and to proceed with the execution albeit the deposit was belated. That there exists power on the part of the execution Court to extend the time even without application is clear from the decision in K. Kalpana Saraswathi Vs. P.S.S.S. Chettiar (MANU/SC/0015/1979 : AIR 1980 SC 512)."
25. The Court below having power to extend the time to comply with the condition of the decree when allowed the decree holder to deposit the balance consideration price, the grant of permission of the Court to the decree holder to take such steps is implied. Moreover the judgment debtor did not appear in the execution case in spite of receiving notice thereby allowed the decree holder to take such course to get the decree satisfied, she therefore is not entitled to impeach the said action of the decree holder for want of formal order of the Court sanctifying the said actions.

26. Let me now consider the argument of Mr. Karmakar that the application under Section 28 of the Specific Relief Act, 1963 filed by the judgment debtor is barred by limitation. The right of judgment debtor to file an application for rescission of the agreement accrues when the decree attains finality. The decree attains finality on July 04, 2015 when the application for setting aside the ex-parte decree was dismissed consequent upon the dismissal of the application for condonation of delay in filing it. The limitation for filing of the said application being governed by Article 137 of the Limitation Act, 1963 is required to be filed within three years from the said date. The said application for rescission of the agreement for sale was filed on August 27, 2015, therefore, it was filed well within the prescribed period of limitation as such the argument of Mr. Karmakar on this score fails.

27. Before parting with, the argument of Mr. Bardhan regarding maintainability of the revisional application needs to be addressed. In a suit for specific performance of agreement, the Court retains it's jurisdiction over the suit even after the grant of decree of specific performance. The Court under Section 28 of the Specific Relief Act, 1963 retains control over the suit to provide complete relief to the parties to the contract, specific performance of which has been directed by the decree. The Court can direct rescission of the contract in doing such complete justice between the parties in exercise of the jurisdiction vested in it by virtue of the said provision of the said Act by taking into consideration post-decree conduct of the parties in complying with the condition of the decree rendering the decree in executable, the effect is an inexecutable decree remains but the contract goes. Therefore, I am unable to convince myself to accept the argument of Mr. Bardhan, that the order impugned is not amenable to an application under Article 227 of the Constitution of India but it is open to appeal.

28. In view of the discussion made above the order impugned is set aside. C.O. 4271 of 2016 is allowed. There will be no order as to costs.

RE: C.O. 454 of 2017

29. The Title Execution Case No. 02 of 2010 was dismissed for default on June 17, 2015. The petitioner filed an application for restoration of the said execution case. The explanation offered by the petitioner in the application for restoration was although disbelieved by the Court below but the said application was dismissed on the ground that since the contract has been rescinded the said application has become infructuous.

30. The order of rescission of the contract since has already been set aside by the order passed in C.O. No. 4271 of 2016 an opportunity should be given to the petitioner to prove his case made out in the said application for restoration.

The order impugned in the present revisional application is therefore set aside.

C.O. 454 of 2017 is disposed of by directing the 1st Court of learned Civil Judge (Senior Division) at Barasat, District. 24 Parganas (North) to decide the said application for restoration of the Title Execution Case No. 02 of 2010 afresh in accordance with law.

In view of the age of the decree, the learned Court below is requested to dispose of the said application expeditiously preferably within this year without granting any unnecessary adjournment to either of the parties.

No order as to costs.

Urgent photostat certified copy of this judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.


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