KUNJUMOHAMMED A C Vs. GOVERDHAN HATHIBAI COMPANY
LAWS(KER)-1955-6-12
HIGH COURT OF KERALA
Decided on June 10,1955

KUNJUMOHAMMED A. C. Appellant
VERSUS
GOVERDHAN HATHIBAI COMPANY Respondents

JUDGEMENT

- (1.) The plaintiff in a suit for specific performance of a contract for sale of immovable properties and in the alternative for damages is the appellant. The plaintiff along with a nephew of his was running a grocery shop which had dealings with the company of defendants 1 and 2 under which some amounts were due to that company. A suit was filed by the company as O.S. No. 325 of 1105 in the Irinjalakuda Munsiffs Court for the amounts so due. In pursuance of the decree therein items 1 and 2 in the plaint A schedule as well as B schedule properties were attached in execution and sold. Defendants 1 and 2 purchased and obtained a sale certificate dated 1.1.1109, Ext. A being a copy. Ext. VIII(a) is the delivery receipt with regard to the same. According to the plaintiff, there was no actual delivery, the possession being retained by him on an understanding between the parties that when the plaintiff was in a position to pay the amounts due to defendants 1 and 2 the latter would reconvey the properties to the plaintiff. Two pattomchits happened to be executed in favour of the nominees of the plaintiff, all of them being only mere paper transactions, the properties all along remaining in the possession of the plaintiff. Later on, B schedule properties were sold to a third party at the instance of the plaintiff and the sale price adjusted towards the debt in question. Then also defendants 1 and 2 agreed that on payment of the balance the remaining properties would be assigned to the plaintiff. There were some separate proceedings with regard to item No. 3 which also were settled on the understanding to reconvey it. Then on 11.2.1118 there was a settlement through mediators of the transactions between the plaintiff and defendants 1 and 2 at Mattancherry where the office of the defendants was, when, according to the plaintiff, the two defendants agreed that on payment of Rs. 1,651 by the plaintiff A schedule properties would be reconveyed to him by the defendants. Rs. 1,000 was paid in cash then. It was agreed that the balance of Rs. 651 was to be paid before 30.3.1118 when the defendants were to reassign the properties to the plaintiff and give possession after evicting their tenants. The plaintiff approached the defendants with the balance amount but they put off on some pretext or other and did not carry out their part of the contract. Hence the plaintiff claimed that he was entitled to a decree for specific performance. Defendants 3 onwards were originally impleaded as persons holding the property under defendants 1 and 2. Later on, by an amendment of the plaint it was pointed out that the third defendant had purchased the properties with full notice of the contract in favour of the plaintiff. The plaintiffs prayers were for a decree for specific performance on the deposit of the balance of Rs. 651 or in the alternative reimbursement of the Rs. 1,000 advanced by him with interest, adequate damages and connected reliefs. Defendants 1 and 2 contended that there was no contract for reconveyance as alleged by the plaintiff. According to them, in Kanni 1118 when the plaintiff requested that the properties might be sold to him defendants agreed to sell them for Rs. 3,250 on the basis of which the plaintiff paid Rs. 1,000 as advance. The balance was to be paid within three months. As the plaintiff failed to carry out his part of the contract the defendants are entitled to forfeit the Rs. 1,000 advanced by him and treat the contract as cancelled. The third defendant contended that he was bona fide purchaser for consideration, had made valuable improvements and hence he could not be disturbed. The trial court found that the contract as alleged by the plaintiff was true, but he had lost his right to enforce specific performance on account of inordinate delay, raising a presumption of abandonment. An appeal was preferred by the plaintiff in the Anjikaimal District Court. There the learned Judge held that abandonment was not proved but specific performance as such cannot be granted in view of the passage of time bringing about changes in the condition of the properties, the prices of which had gone up and as third parties had come in and acquired rights, and that plaintiff was entitled to damaged claimed by him as an alternative relief. Hence apart from the repayment of Rs. 1,000, advance paid, it was ordered that the plaintiff was entitled to Rs. 1,000 by way of damages. Dissatisfied with the said decision the plaintiff has come here in second appeal. He claims that he is entitled to specific performance itself as there were no laches on his party. Cross objections have been filed by the second defendant (the first defendant having passed away during the pendency of the suit) contending that the lower courts direction regarding liability for damages and interest on the advance amount cannot stand.
(2.) Now coming to the merits of the appeal, and cross objections, what is to be considered is whether the conditions necessary to justify the grant of relief of specific performance exist in this case. The first question that arises for consideration is whether there was an agreement for sale of the plaint properties to the plaintiff as alleged by him. Regarding this there are concurrent findings by the lower courts to the effect that on 11.2.1118 there was a contract to assign the properties for Rs. 1,651 in pursuance of which an advance of Rs. 1,000 was received from the plaintiff by defendants 1 and 2, the understanding being that the balance amount of Rs. 651 would be paid by 30.3.1118. This finding cannot be questioned. The evidence shows that the lower courts were quite justified in coming to that conclusion and holding that the second defendants contention that the agreement was that the consideration should be Rs. 3,250 is not true. The trial court has found that the plaintiff has not made out his case that he offered the balance amount as agreed to during the stipulated time. The first appellate court is of the view that there is no evidence for a conclusive finding that the plaintiff was not in a position or that he had no capacity to raise this fund if pressure was brought on him and the contract was conveyed by the act of the defendants to one with time as the essence of the contract by sending an adequate notice. Obviously, the lower appellate court also is of the opinion that the plaintiff has not proved the alleged offer of the balance amount. A perusal of the evidence on this point also leads to the same conclusion. On the basis of the above findings the legal aspect of the question has to be gone into. We are dealing with a case of agreement to sell immovable property. One of the defences put forward is that the plaintiff has come at a belated stage, the agreement being on 11.2.1118, the date of the payment of the balance being 30.3.1118 and the suit itself being dated 11.2.1121. Time is the essence of a contract whenever it appears to have been the real intention of the parties that it should be so and not where it was merely inserted as a formal part of the contract. The intention, of course, may either be expressed or may be implied. In Fry on Specific Performance, in Para.1077, it is observed as follows: In order to render time thus essential, it must be clearly and expressly stipulated, and must also have been really contemplated and intended by the parties that it shall be so; it is not enough that a time is merely mentioned during which or before which something shall be done. This principle has also been laid down in the decisions of this Court. In AIR 1950 Travancore - Cochin 61 this point came up for consideration before a Full Bench of which one of us was a party. Therein Para.8 of the judgment it is observed as follows: Time is not ordinarily of the essence of a contract of sale though the parties can make it so by express agreement in the contract itself or inferred if the nature of the property intended to be sold requires it. This point was discussed by the Privy Council in Jamshed Khodaram v. Burjorji Dhunjibhai (40 Bom. 289). It was pointed out in that case that equity which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. Counsel for the contesting defendants pointed out that the aforesaid decision dealt with a case where there was a definite offer of the balance of consideration due under the agreement within a few days of the date fixed for its payment and hence that decision is not applicable to the present case where a definite offer before the date of the suit itself has not been conclusively proved. There is no force in this argument. The statute gives the plaintiff a definite period during which he has got a right to seek the help of the court to enforce his reliefs. What we have to consider is whether in this particular instance the parties had any intention that time is to be the essence of the agreement for sale. Here though the date fixed for the payment of balance was 30.3.1118 the sale in favour of the third defendant as per Ext. V was only on 8.11.1119. There is nothing to show that there was any urgent necessity for defendants 1 and 2 to assign these properties. They had no financial difficulties at all. There is no reliable evidence to show that there was any express stipulation to the effect that if the balance was not paid before 30.3.1118 the agreement would stand cancelled. The fact that no notice was sent to the plaintiff intimating such termination and a forfeiture of the advance, being one of the conditions in the agreement as put forward by the second defendant in Para.6 of his written statement, would go to show that time was not considered as the essence of the contract by the parties here. Banerji in his Tagore Law Lectures of Specific Relief observes as follows at page 329: It has accordingly been laid down that a court of equity will relieve against literal default, and enforce specific performance of the substantive agreement, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps towards completion, if it can do justice between the parties and if there is nothing in the express stipulations between the parties, the nature of the property, or the surrounding circumstances, which would make it inequitable to interfere with and modify the legal right. Here the agreement was the result of mediation. The major part of the consideration had already passed to defendants 1 and 2. Only a sum of Rs. 651 remained to be paid. Defendants 1 and 2 were financially in a much better position than the plaintiff himself. Under these circumstances, the lower appellate court was quite right in holding that time was not of the essence of the contract in the present case. So unless other circumstances exist making it inequitable to grant the relief of specific performance of the agreement in question the plaintiff is entitled to it. On behalf of the contesting defendants it was contended that in view of the latches on the part of the plaintiff and the creation of interests in third parties like the third defendant there is no jurisdiction to allow the prayer of the plaintiff here and the only relief he is entitled to is the reimbursement of Rs. 1,000, advance paid, the direction of the lower court regarding payment of interest on that and damages coming to Rs. 1,000 being unjust. The lower appellate court had refused the relief of specific performance and granted the alternate relief of damages on the ground that the price of the properties had gone up and there were assignments in favour of third parties like the third defendant who have made improvements and thus new equities have arisen. As pointed out in 1947 TLR 419 the generally recognised view is that contracts relating to real property can necessarily be satisfied only by a conveyance of the particular estate or parcel contracted for and that a court of equity decrees performance of a contract for land, not because of the real nature of the land but because damages at law, which must be calculated upon the general money value of the land, may not be a complete remedy to the purchaser, to whom the land, may have a peculiar and special value. In the present case the properties originally belonged to the plaintiff and certainly he had a special value for the same. Emphasis was placed on the want of readiness and capacity of the plaintiff to carry out his part of the contract, namely, the payment of the balance, and AIR 1954 TC 440 was cited as an authority to show that where continued readiness and willingness from the date of the contract to the time of the hearing to perform the contract on his part is not proved by the plaintiff he cannot seek the discretionary relief of specific performance. In the present case, the evidence clearly shows that the plaintiff was anxious to get the assignment of the properties. The second defendants contention in the suit was that the consideration amount fixed was Rs. 3,250 and not Rs. 1,651. In the face of that the plaintiffs position that defendants 1 and 2 were not willing to carry out their part of the contract is not without force. Under such circumstances we do not think that the plaintiff can be penalised on this ground. Then there is the contention on the defence side that the properties have increased in price and the changed condition was rightly taken into account by the lower court. In AIR 1952 Mad. 389 cited on behalf of the plaintiff at page 393 it is observed as follows: With reference to S.22(2) it is well settled that the question of hardship must be judged as on the date of the transaction and not in the light of subsequent events and that further the hardship should be one collateral to the contract and not in relation to a term of the contract such as the quantum of consideration. On the above principle there it was held that subsequent rise in price will not be a relevant ground for refusing the plaintiff specific performance. The only point remaining to be considered is whether the appearance of defendants 3 onwards on the scene affects the plaintiffs right. It has been found by the trial court that the third defendant had notice of the claims of the plaintiff and was not a bona fide purchaser. The lower appellate court has concurred in this finding. The evidence fully supports this conclusion. So the assignment in favour of the third defendant cannot affect the equities in favour of the plaintiff. Thus it follows that under the circumstances the plaintiff is entitled to specific performance of the agreement for sale itself and there is no justification in refusing this relief or granting the alternative relief of damages.
(3.) The plaintiffs prayer is that he may be granted a decree for specific performance on depositing the balance amount of Rs. 651. The third defendant who is an assignee under Ext. V has claimed value of improvements before the trial court. Issue No. 9 was raised on that specific point. The trial court has not dealt with it. In the nature of the finding arrived at then omission to dispose of this issue did not affect the result. The same was the case in the first appellate court. But here as the plaintiffs right for a decree for specific performance is upheld this issue has become vital. If the third defendant and those claiming under him have effected improvements the question whether under law the value of the same is to be paid to them has to be decided. If they are so entitled the plaintiff is bound to deposit the said amount also apart from the balance amount of Rs. 651. Though this court has more than once pointed out that it is wrong for the lower courts where a suit has been proceeded with and evidence taken to fail to record its finding on all the issues raised still some of the lower courts are not complying with the same and are thus creating difficulties for this court. So the final disposal of the suit can be only after recording a finding on issue 9. It has to be remanded for final disposal by the trial court after the disposal of the said issue and in the light of the findings and conclusions arrived at by this court on the main issue.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.