(1.) THIS is an appeal by the plaintiff against the appellate judgment and decree of the learned District Judge of Kota, dated August 14, 1961, setting aside the judgment and decree of the trial court and dismissing the suit for specific performance of a contract for the sale of immovable property, with the direction that the plaintiff shall be entitled to the refund of Rs. 1000/- paid by him to the defendant on account of the price.
(2.) DEFENDANT Bishan Swarup owns a piece of land measuring 100 feet x 100 feet near his bungalow, in Kota city. An agreement (Ex. 1) was made by his son Vishweshwar Swarup on April 12, 1958, for the sale of that land to the plaintiff for Rs. 7,750/-, at the rate of annas twelve per square foot, plus Rs. 250/- on account of a boundary wall towards the back. It was stated in the agreement that a sum of Rs. 1000/- had been paid by the plaintiff in advance and that the sale-deed would be registered by May 31, 1951. If for any particular reason it was not convenient to the parties to do so, it was agreed that the sale-deed would be registered by June 30, 1958. The agreement further provided that the sale deed would be registered in favour of those persons whose names would be disclosed by the plaintiff, but that the registration expenses would fall on the vendee. A further provision was made that a partition wall would be built towards the back, at the cost of the vendor and the vendee and that both the parties would be entitled to use it, but if the vendee did not approve of that arrangement he would pay a further sum of Rs. 150/- on that account. The execution of this document is admitted in this Court.
It appears that the plaintiff sent a note (Ex. 2) to the said Vishweshwar Swarup, on May 7, 1958, pointing out that it would be better if the sale-deed was registered before May 30, 1958 and requesting that the date of arrival of his father, the defendant, may be intimated to the plaintiff for that purpose. Vishweshwar Swarup sent an interim reply Ex. 3 on May 10, 1958, informing the plaintiff that he had referred the matter to his father and that he would send a further intimation to him on receiving a reply. At that time, defendant Bishan Swarup was employed as a Civil Judge and was posted at Bikaner. Nothing happened for almost a month, and after the expiry of the initial date (May 31, 1958) for the registration of the sale-deed, Vishweshwar Swarup sent letter Ex. 4 to the plaintiff informing him that his father, the defendant, proposed to visit Kota on or about June 15, 1958. The plaintiff was therefore requested to be at Kota from June 15 to June 22, 1958 so that he could meet him there. It appears that the parties met at Kota on June 22, 1958 and another agreement (Ex. 5) was executed by them on that date. It was stated in it that the parties had agreed that they would wait for the registration of the sale deed until defendant Bishan Swarup was allowed privilege leave and came over to Kota. Approximately, that period was put upto August 31, 1958, but it was also provided that if this did not happen to be so, the defendant would send a power of attorney in the name of some one else for the purpose of the execution of the sale deed before September 15, 1958.
This much has been established by the documentary evidence to which reference has been made above and has not been disputed in this Court.
It appears that the defendant did not inform the plaintiff about the position regarding the sanction of his privilege leave, or the execution of a power of attorney, even though, as has been admitted by the defendant in his own statement, he visited Kota in August, 1958. The defendant has also admitted that he did not inform the plaintiff of his arrival in Kota in that month. Thus nothing was done upto August 31, 1958. The defendant has further admitted that he visited Kota again in September, 1958 and the plaintiff met him in that month. Thus September 15, 1958, which was the other date mentioned in agreement Ex, 5, was also allowed to pass by. After waiting for a few more days, the plaintiff sent a notice Ex. 8 to the defendant on October 14, 1958, reiterating all the facts relating to the agreements between the parties and pointing out that the defendant was dishonestly evading the execution of the registered sale-deed although he (plaintiff) was always prepared to purchase the land on payment of the price and was prepared to purchase it even at that stage. It was further stated in the notice that if the sale-deed was not registered within 25 days from the date of the notice, the plaintiff would institute a suit for specific performance. It was mentioned in the notice that if the defendant was willing to execute the sale-deed, a week may be named for the purpose so that the plaintiff might purchase the stamps and arrange for leave to reach Kota.
The defendant gave reply Ex. 9 on October 23, 1958. It reached the plaintiff on October 26, 1958. In it, the defendant went to the extent of disowning the authority of his son Vishweshwar Swarup to enter into agreement Ex. 1, although it appears that he condescended to ratify his son's action. It is a very long reply, but its reading leaves no room for doubt that, in particular, the defendant informed the plaintiff that matters relating to "pipe line etc. " owned by him and the cost of the boundary walls had not been mentioned by the plaintiff in his notice. The defendant further pointed out that the agreement (Ex. 1) was incomplete because the name of the vendee had not been disclosed. The defendant asked the plaintiff to supply a draft of the conveyance, and a copy of the agreement duly certified to be a true copy, and to get the draft approved by the defendant and then to prepare the necessary sale-deed on non-judicial stamps. Towards the end of the notice, the defendant stated that after all these matters had been complied with, the defendant "may even now agree to sell the land. . . . . . . . . as a gesture of goodwill. . . . . . . . . and may further agree to release the forfeited amount of earnest money". The plaintiff was asked to take the benefit of this offer within a period of three weeks from the date of the notice.
The plaintiff sent a reply (Ex. 10) on November 6, 1958. He stated that since the "counter copy" of the contract for the sale of the land was already with the defendant's son, it was not necessary to send it again. For the boundary wall, he pointed out that the agreement (Ex. 1) made a proviso for the payment of Rs. 250/- and Rs. 150/- on that account. As regards the pipe line, he stated that if it belonged to the defendant, and if it ran underground, the defendant was at liberty to take it out. Then the plaintiff made it clear that he was keeping the full sale price in deposit in his bank for the last eight months and that he was even prepared to deposit it with the defendant or his nominee. Further, the plaintiff stated that the sale-deed was to be registered at Kota and that there was no necessity of getting its draft approved because it was to be a simple document in terms of sec. 55 of the Transfer of Property Act. The plaintiff reiterated that he was prepared to perform his part of the contract, and called upon the defendant to expedite the performance of the contract from his side within a reasonable time. This notice, it has been proved, was received by the defendant's counsel on November 8, 1958. The plaintiff followed it up by a telegram (Ex. 15) dated November 18, 1958, calling upon the defendant to take ready money and sell the land. Further, the plaintiff sent letter Ex. 16 on November 21, 1958, stating that the was visiting the defendant daily with the money, but that the defendant was avoiding the Completion of the sale-deed, and he called upon him to execute it before leaving Kota. This letter was sent by registered post. The same day, the defendant sent telegram Ex. 10 to the plaintiff stating that the plaintiff had failed to comply with the essential conditions and the pre requisites, and pointing out that the time for sale had already expired and the earnest money forfeited. Some correspondence took place thereafter, but it is not necessary to refer to it.
These other facts and circumstances have also been established by the evidence on the record. As the defendant took the stand that he was justified in refusing to sell the land to the plaintiff, the plaintiff instituted the present suit on March 13, 1959, for specific performance of the contract for the sale of the land.
The defendant resisted the suit on several grounds, but it is not necessary to refer to them in any detail. The learned Civil Judge of Bundi, who tried the suit, reached the conclusion that the plaintiff was always ready and willing to perform his part of the contract and that the defendant avoided the execution of the sale-deed, and ultimately refused to execute it. He therefore decreed the suit by his judgment dated October 6, 1960. The defendant went up in appeal to the District Court. After hearing the learned counsel for the parties, the learned District Judge formulated the following three points for consideration in the appeal - 1. Whether the defendant repudiated the contract before the stipulated time? 2. Whether time was of the essence of the contract? 3. Whether the repudiation of the contract by the defendant on November 21, 1958 was justified? It is admitted that these were the only points for consideration in the appeal.
A perusal of the judgment shows that by the first question, the learned Judge meant to examine whether the defendant had repudiated the contract before September 15, 1958, and he reached the conclusion that there was no evidence by which it could be gathered that the contract was repudiated during the period June 22, 1958 to September 15, 1958. This finding has not been challenged in this Court.
It has however been strenuously argued by Mr. Agrawal, learned counsel for the plaintiff-appellant, that the learned Judge of the lower appellate court fell into a serious error of law, in deciding the second question whether time was of the essence of the contract, as he based his finding in the defendant's favour on events which took place after the contract had been entered into. As I shall show presently, this submission of the learned counsel is correct and must prevail.
In Jamshed Khodaram Irani vs. Burjorji Dunjibhai (l) their Lordships of the Privy Council, while considering a case in which it had been pleaded that time was of the essence of the contract, made the following observation - "but in such a case the intention must appear from what has passed prior to the contract, the construction of which cannot be affected in the contemplation of equity by what takes place after it has once been entered into. " There can be little doubt that this is the correct position of the law. The judgment was cited before the learned District Judge and he drew heavily on it for the purpose of deciding the point in controversy. It may also be mentioned that the learned counsel for the parties are in agreement that the judgment in Jamshed Khodaram Irani's case (l) correctly lays down the law on the point. But, surprisingly enough, the learned District Judge did not apply the law correctly and he committed the serious mistake of taking into consideration what took place after the original agreement (Ex. 1) had been made. In fact he based his finding on this point of controversy, almost entirely on the subsequent events. The respondent's learned counsel was therefore frank enough to concede that a serious error had been committed by the learned Judge of the lower appellate court and that his finding cannot be held to be binding in this second appeal. I have therefore to decide the question afresh.
It may be mentioned at the outset that it is well settled that in contracts] for sale of immovable property, time is generally not of the essence of the agreement, and specific performance has been insisted upon even though a date had been specified in the agreement for the execution of the sale-deed. The proper criterion, therefore, is to ascertain whether the agreement in question goes to show that it was the intention of the parties that time should be of the essence of the contract for the sale of the immovable property. In other words, in spite of any mention of the date for the performance of the contract, it is necessary to examine the substance of the agreement, and a conclusion in favour of holding that the contract had necessarily to be performed within the prescribed time limit, should be reached if it can be arrived at without any room for doubt. Viewed in this perspective, it becomes apparent, on a perusal of agreement Ex. 1 that while the parties had agreed that the sale-deed would be registered by May 31, 1958, or upto June 30, 1958, it is not possible to take the view that this unmistakably points out that the parties had intended that time was of the essence of the contract.
(3.) A perusal of paragraph 3 of the written statement further goes to support the view which I have taken. As a matter of fact it is significant that the defendant has not ventured to take the plea in his written statement that time was of the essence of the contract and that he was entitled to repudiate it for that reason. In these facts and circumstances, I have no hesitation in reaching the conclusion that time was not of the essence of the contract for the sale of the immovable property in question and the learned District Judge was completely in error in taking a different view.
To get out of the difficulty, the learned counsel for the respondent tried to place reliance on that portion of the judgment of their Lordships of the Privy Council in Jamshed Khodaram Irani's case (l) in which they have made the observation that equity will not assist where there has been undue delay on the part of one party to the contract and the other has given him reasonable notice that he must complete it within a definite time. The learned counsel therefore tried to raise the argument that the plaintiff was guilty of undue delay and that he did not secure the registration of the sale-deed even though the defendant had given him a reasonable notice of 21 days in his reply Ex. 9. It would be enough to mention in this connection that the defendant did not take the plea of "undue delay", or reasonable notice" in his written statement, no issue was framed in regard to it and the point was not raised for the consideration of the trial court. It was not even taken as a ground of appeal in the lower appellate court. As the argument which was attempted to be raised for the first time in this Court, is really based on questions of fact, it is not possible for this Court to allow Mr. Lodha to raise it at this very late stage.
This leaves for consideration the third question whether the defendant was justified in repudiating the contract on November 21, 1958, by his telegram Ex. 19 to which a reference has been made above. On this point also, the finding of the learned District Judge is in favour of the defendant. He has based it almost entirely on the defendant's notice Ex. 9 dated October 23, 1958. While considering that notice, the learned Judge, at one stage,, went to the extent of making the following observation - "that also leads to the conclusion that the defendant was desirous of getting rid of the agreement, by falsely putting the blame of breach of contract on the plaintiff. " But the learned Judge took the view that the defendant had not "super imposed" any condition in his notice Ex. 9 and that as the plaintiff did not tender the conveyance or supply the requisite stamps or disclose the names of the purchasers upto November 16, 1958, on which date the period of three weeks specified in notice Ex. 9 was to expire, the plaintiff was guily of unnecessary delay. In reaching this conclusion, the learned District Judge observed as follows - "the plaintiff was thus guilty of unnecessarily (sic) delay and it entitled the defendant to treat the contract at an end, as the defendant had made the time to be the essence of the contract. " It is therefore quite clear that in arriving at his finding on point No. 3, the learned Judge was obsessed by his earlier finding on point No. 2 that time was of the essence of the contract. As that finding has been found to be incorrect, the finding on the question of repudiation of the contract cannot be sustained and the matter has to be examined afresh in this Court. It may also be mentioned here that the finding of the learned District Judge on this aspect of the controversy suffers from the serious defect that he did not take into consideration the plaintiff's notice Ex. 8, his reply Ex. 10, his telegram Ex. 15 and his letter Ex. 16, so that it is not based on a consideration of the evidence on the record.
I have already made a mention of the various documents which have a bearing on the present controversy. The parties had agreed under document Ex. 5 dated June 22, 1958 that the original time limit was not to be adhered to and that the sale-deed was to be executed when the defendant proceeded on privilege leave and came to Kota by August 31, 1958. It was further agreed that if that did not happen to be so, the defendant would send the power of attorney in the name of some one else before September 15, 1958. As has been mentioned, the defendant in his statement admitted that he visited Kota in August, 1958 and that he did not inform the plaintiff of it. The defendant has also admitted that he came to Kota in September, 1958 and that the plaintiff went and saw him during that month. As the defendant did not execute the sale-deed during those visits, the plaintiff was left with no alternative but to send notice Ex. 8 to him on October 14, 1958. In that notice, the [plaintiff made a reference to his efforts to obtain the sale-deed from the defendant and he charged the defendant of evasive tactics. He made it quite clear that he himself was all along ready and willing to purchase the land after paying the remaining price. It was further clarified in the notice that the plaintiff was prepared to pay the balance and purchase the land even at that stage and he gave the defendant a time limit of 25 days to execute the sale-deed in his favour. Further, the plaintiff requested that a week's advance intimation may be given to him so that he might purchase the requisite stamps, obtain leave of absence from his duties and reach Kota. This notice was replied by the defendant on October 23, 1958 and I have already made a reference to the various points he raised in that reply. I need not repeat those points here, but it, is quite evident that the defendant went to the extent of challenging even the original agreement of sale, and while he showed his willingness to ratify it, he raised a number of points which were quite extraneous to the agreement for sale. For instance, he raised the question of his right of easement in regard to some pipe line which, it was claimed, was passing under the land in question. He also raised a question about the boundary wall, even though it had been provided for in the original agreement, and called upon the plaintiff to submit a draft of the sale-deed to him, along with a copy of the agreement for sale duly certified to be a true copy and correct copy, and to get the draft approved by him (defendant ). After calling upon the plaintiff to carry out all these instructions, the defendant went on to state that if the plaintiff complied with his directions, the defendant "may even now agree to sell the land" and for this purpose he gave a time limit of three weeks to the plaintiff. As, however, Ex. 9 was riddled with conditions which were quite extraneous to the terms of the agreement and did not categorically show the defendant's willingness to execute the sale-deed within the time limit specified by him, it cannot be said with any justification that it was the duty of the plaintiff to comply with the terms of that notice.
As has been stated, reply Ex. 9 was given by the defendant on October 23, 1958 and it has been argued by Mr. Lodha that it kept the agreement for sale alive upto November 16, 1958, when the time limit of three weeks was to expire. But a perusal of the defendant's own statement shows that this was not really so. During the course of his cross-examination, he made it quite clear that he had forfeited the sum of Rs. 1000/- (which had been given by the plaintiff by way of an advance under document Ex. 1) during the period October 11, 1958 to October 14, 1958 because by that time the plaintiff had according to him committed a breach of the contract. In the face of this statement of the defendant, it is quite futile to argue that it was open to the plaintiff to secure the registration of the sale-deed upto November 16, 1958 on compliance with the terms of the defendant's notice Ex. 9
Mention has already been made of the developments which took place after October 23, 1958. Before the period of three weeks, mentioned in notice Ex. 9, had expired, the plaintiff sent reply Ex. 10 on November 6, 1958 clarifying that it was not necessary for the plaintiff to send a copy of the original agreement because its counter part was already available with the defendant's son. The plaintiff also clarified that the question regarding the settlement of the boundary wall did not arise as it had been fully dealt with in agreement Ex. 1 under which payments of Rs. 250/- and Rs. 150/- were to be made on that account in certain circumstances. As regards the pipe line, the plaintiff made it clear that the defendant was at liberty to remove it if it ran underground. At the same time, he gave an assurance to the defendant that he had the necessary funds to pay the remaining sale price and that he was even willing to deposit it with the defendant or his nominee. In that reply, the plaintiff further made the clarification that it was not really necessary to prepare a draft of the sale-deed as a simple document in terms of sec. 55 of the Transfer of Property Act would be quite sufficient. The defendant did not choose to send a reply to that communication and the plaintiff therefore sent him telegram Ex. 15 on November 18, 1958 calling upon him to take ready money and sell the land. This was followed by registered notice Ex. 16 dated November 21, 1958. Instead of showing his willingness to execute the sale-deed, the defendant sent telegram Ex. 19 to the plaintiff blaming him for not complying with the "conditions" and "pre-requisities" of the sale and pointing out that he had forfeited the earnest money as the time had already expired. All this correspondence leaves no room for doubt that it was the defendant who had rescinded the contract without any justification.